a)Using the AD-ERU and the WS-PS diagrams and assuming the real
wage is
W/P, explain the effects on the real wage, the real exchange rate
and output
when there is:-
(i) a decline in tax wedge
(ii) an expansionary of fiscal policy
(b) A small and open economy which practices a flexible exchange
rate system has
experienced a permanent positive aggregate demand shock due to a
drastic increase in export. Based on this situation, draw the
PC-MR, the IS-RX, and...