The mundell-fleming model takes the world interest rate r, Ask an Expert

Economics

The Mundell-Fleming model takes the world interest rate r as an exogenous variable. Leti´s consider what happens when this variable changes.

(a) What might cause the world interest rate to rise?

(b) In the Mundell-Fleming model with a a´oating exchange rate, what happens to aggregate income, the exchange rate, and the trade balance in a small open economy when the world interest rate rises?

(c) In the Mundell-Fleming model with a O¨xed exchange rate, what happens to aggregate income, the exchange rate, and the trade balance in a small open economy when the world interest rate rises?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91673786

Have any Question?Write your Review or question?

Related Questions in Business Economics

You sell bicycle theft insurance if bicycle owners do not

You sell bicycle theft insurance. If bicycle owners do not know whether they are high- or low-risk consumers, is there an adverse selection problem?

Considera firm that faces thefollowingexpectedfuture

Consider a firm that faces the following expected future marginal product of capital: MPKf =1000- 2K Where MPKf is the expected future marginal product of capital and K is the capital stock. The price of capital, pk, is ...

An urn contains 5 red and 10 blue balls balls are drawn

An urn contains 5 red and 10 blue balls. Balls are drawn sequentially from urn without replacement. Let X be the number of draws necessary in order to obtain exactly 4 red balls. Find probability mass function of X

Overall we see that within the realm of trade

Overall we see that within the realm of trade liberalization we see the reduction and/or removal of restrictions of barriers, such as tariffs, on the free exchange of goods between nations. The results of such actions is ...

Cowcor copr has a market debt-equity ratio of 100 a

COWCOR COPR has a market debt-equity ratio of 1.00 a corporate tax rate of 35% and pays 7% interest on its debt. By what amount does the interest tac shield from its debt lower COWCOW's WACC? WACC IS LOWERED BY ___%. (Ro ...

Explain why the purchase and sale of used goods and of

Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily.

Describe the difference in economic profit between a

Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium?

What does it mean when dollars are used as a unit of

What does it mean when Dollars are used as a unit of measurement along the vertical axis? (Indifference curve only) Can you also show me how the graph will look like?

Discuss three ranges of the aggregate supply curve explain

Discuss three ranges of the aggregate supply curve. Explain changes in the AD-AS macroeconomic equilibrium due to the aggregate demand shifts and due to aggregate supply shifts. Apply the AD-AS model to the two types of ...

Whats your answer about the equilibrium change from an

What's your answer about the equilibrium change from an event which decreases both demand and supply? You don't need to provide graph here. Just describe the curve shifts and how the equilibrium price and equilibrium qua ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert