Question 10. Applying the Mundell-Fleming model analyse the impact ondomestic income, interest rate, CA and KA of the following events:(a) an increase of foreign interest rate;(b) a fall of foreign demand on domestic goods.Provide an analysis for two different countries:country A with fixed exchange rate and perfect capital mobilitycountry B with flexible exchange rate and imperfect capital mobilityplease do not make a long description butprovide graphs and short analysis

The Mundell-Fleming model is a financial framework that mixes elements of international economics…

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Mundell-Fleming model

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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