the following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating. derive the equilibrium equations for is* and lm*, sketch a graph of the two equations and solve for the equilibrium values of y, e and nx.
the following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating.
derive the equilibrium equations for is* and lm*, sketch a graph of the two equations and solve for the equilibrium values of y, e and nx.
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Suppose that will all exogenous variable at their original values, the autonomous part of money demand increases to 80. Solve for the new values of e, Y and NX. With the help of graphs, explain very carefully the mechanisms by which a new equilibrium is reached.
by Bartleby ExpertSuppose that with all exogenous variables, including G and M at their original values, business becomes less confident about the future and reduce their autonomous level of investment from 500 to 200. Solve for the new values of e, Y and NX. With the help of graphs, explain very carefully the mechanisms by which a new equilibrium is reached.
by Bartleby ExpertSuppose that with all exogenous variables, including G and M at their original values, business becomes less confident about the future and reduce their autonomous level of investment from 500 to 200. Solve for the new values of e, Y and NX. With the help of graphs, explain very carefully the mechanisms by which a new equilibrium is reached.
by Bartleby ExpertIn light of your answers to parts (b) and (c), compare the relative effectiveness of fiscal and
by Bartleby ExpertWith all other exogenous variables at their original levels, suppose the Central Bank attempts to stimulate the economy by increasing money supply M from 3000 to 3300. Calculate the new values of Y, e and NX. Explain the mechanism by which a new equilibrium is reached.
by Bartleby ExpertWith all other exogenous variables at their original levels, suppose the Central Bank attempts to stimulate the economy by increasing money supply M from 3000 to 3300. Calculate the new values of Y, e and NX. Explain the mechanism by which a new equilibrium is reached.
by Bartleby Expert
