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Consider the MundellFleming Model under Flexible Exchange R.pdf

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Consider the Mundell-Fleming Model under Flexible Exchange Rates. Let the economy be under a flexible exchange rate regime. Suppose the foreign interest rate increases. a. Show the complete transmission mechanism of the change in the foreign interest rate. b. Show graphically the effects of the change in the foreign interest rate to the equilibrium of the economy.

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Consider the Mundell-Fleming Model under Flexible Exchange Rates. Let the economy be under a flexible exchange rate regime. Suppose the foreign interest rate increases. a. Show the complete transmission mechanism of the change in the foreign interest rate. b. Show graphically the effects of the change in the foreign interest rate to the equilibrium of the economy

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Consider the MundellFleming Model under Flexible Exchange R.pdf

  • 1. Consider the Mundell-Fleming Model under Flexible Exchange Rates. Let the economy be under a flexible exchange rate regime. Suppose the foreign interest rate increases. a. Show the complete transmission mechanism of the change in the foreign interest rate. b. Show graphically the effects of the change in the foreign interest rate to the equilibrium of the economy