Continue with the scenario from question 1, but now suppose your current goal is to maintain a particular exchange rate

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Continue with the scenario from question 1, but now suppose your current goal is to maintain a particular exchange rate

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Continue With The Scenario From Question 1 But Now Suppose Your Current Goal Is To Maintain A Particular Exchange Rate 1
Continue With The Scenario From Question 1 But Now Suppose Your Current Goal Is To Maintain A Particular Exchange Rate 1 (26.73 KiB) Viewed 51 times
Continue with the scenario from question 1, but now suppose your current goal is to maintain a particular exchange rate target. Using the open economy IS/LM model, what happens to GDP, the interest rate, and the trade balance (net exports) in response to each of the following shocks (illustrate the changes in the 3-pane diagram and then summarize your findings): I (a) The president of your country cuts taxes. (b) The president circumvents the central bank and increases the money supply with- out your approval.
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