a) What is WaIras's Law. Explain how equilibrium is achieved in an economy with 5 markets....

a) What is WaIras's Law. Explain how equilibrium is achieved in an economy with 5 markets.

b) . Supposing that Malaysia is adopting the fixed exchange rate system. By assuming that the Purchasing Power Parity holds, and based on IS-LM and AD-AS diagrams, explain what would happen to relative prices if the government increases or decreases its expenditure.

c) ) In view of the Walras's law, if n-1 markets are already specified. the specification of bond market would have been superfluous. Explain bond market equilibrium using IS-LM.bb model.

Expert Solution

Rahul Sunny answered 9 months ago

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