2 Long Theory Problems on Mundell- Fleming model

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.'