2 Long Theory Problems on Mundell- Fleming model

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Consider the case of an exogenous increase in payments into a country.

 

1. In a Mundell- Fleming model, what will be the effects on a country's nominal and real exchange rate and GDP under:

 

a)  Fixable exchange rates

 

b)  Fixed exchange rates with sterilization                                                                          

 

c)  Fixed exchange rates without sterilization

 

 

 

3. Now answer question 1 using a simple monetary model.'

 

 

  • 12 years ago
Answers to 2 Long Theory Problems on Mundell- Fleming model
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