Answer Happy

Answer all parts (a)-(c) of this question.
(a) Comment on the effectiveness of fiscal and monetary
policy in the Mundell- Fleming model for a small open economy with
perfect capital mobility. In your answer make sure to distinguish
between fixed and floating exchange rate regimes. Use diagrams to
illustrate your answer.
(b) A floating exchange rate is preferred to a fixed
exchange rate if the economy is hit by real shocks. Use a diagram
to critically assess that statement. How you answer would change if
prices in the economy are fully flexible?
(c) After the introduction of the Euro, the nominal
interest rates in the European countries joining the single
currency have converged to a similar level. A similar convergence
occurred in the rates of inflation of those countries. Provide an
economic explanation for those empirical facts.