Business, 06.05.2020 03:25, anaroles04

The Mundell-Fleming model takes the world interest rate r as an exogenous variable. Letís 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 áoating 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 Öxed 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?

Answers: 2

Show answers

Answers

answered: southsan2021

a) The Mundell model yield the globe proportion r* as associate exogenous variable. Within the locked economy, the $64000 rate is set by the collaboration among convertible and asset. In undeveloped economy, the globe actual rate is set by the collaboration among world equivalent and world speculation. Rate can increase because of decline in saving and growth in asset. Within the short, the globe rate can rise because of growth within the demand for merchandise and facilities or due to decline in the pecuniary resource.

In the Mundell model, beneath fluctuating interchange scheme, the curve moves to the leftward because of decline within the speculation. A decline within the speculation can result in rise in the interest proportions. The EM curve moves to the rightward because of decline within the cash demand. A decline within the cash demand can basis to extend in the interest proportions.

A growth within the interest proportions can source to associate extra provide of actual balance, once the provision of actual balance MP is fastened.

Thus, within the market, financial gain should rise. A rise within the financial gain can result in growth in the cash demand. A rise within the world interest proportions can result in growth in the capital flow. The rise in capital flow can result in decline the charge per unit. Thus, the trades, and productivity can rise.

In the Mundell model, beneath fastened charge per unit, each IS and luminous flux unit curve moves to the leftward. As, IS curve moves to the leftward because of decline within the speculation demand. Moreover, LM curve moves to the leftward because of the decline within the charge per unit. Thus, the money provide can decrease

answered: Guest

dez nutz lol

explanation:

answered: Guest

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

Other questions on the subject: Business

Business, 22.06.2019 02:30, walterzea70

rural residential development company and suburban real estate corporation form a joint stock company. the longest duration a joint stock company can be formed for is

Answers: 2

continue

Business, 22.06.2019 11:30, fjjjjczar8890

Which of the following statements about cash basis accounting is true? a. it is more complicated than accrual basis accounting. b. the irs allows all types of corporations to use it. c. it follows gaap standards. d. it ensures the company always knows how much cash flow it has.

Answers: 2

continue

Business, 22.06.2019 20:40, Jacobstoltzfus

Review the wbs and gantt chart you created previously. propose three to five additional activities that would you estimate resources and durations. now, identify at least eight milestones for the recreation and wellness intranet project. remember that milestones normally have no duration, so you must have tasks that will lead to completing the milestone. add your activities and milestones to your gantt chart, creating a new gantt chart. estimate the task durations and enter dependencies as appropriate. remember that your schedule goal for the project is six months. copy the gantt chart and network diagram to a word document.

Answers: 2

continue

Business, 22.06.2019 22:00, thruhdyjgrt

Acompany's sales in year 1 were $300,000, year 2 were $351,000, and year 3 were $400,000. using year 2 as a base year, the sales percent for year 3 is

Answers: 2

continue

Do you know the correct answer?

The Mundell-Fleming model takes the world interest rate r as an exogenous variable. Letís consider w...