Question

Instructions: Following all scenarios, please copy and answer the questions asked regarding each scenario in the spaces provided.

Horror in Mumbai
In just a few months, India has gone from a land of economic miracle, charging ahead at 9% annual growth, to a nation in apparent disarray. First the global crisis dealt a blow. Then the Nov. 26 terror attacks in Mumbai, which left nearly 200 dead and hundreds injured, highlighted India's political, security, and intelligence failures. Foreign investors may steer clear for a time, and business in general may slow as Indians lose confidence in their government.   (Edited by Harry Maurer & Cristina Linblad)

Note: STUDENTS WILL COPY THE BELOW TEXT AND PASTE WITH THE CORRESPONDING ANSWERS

Q1: Which model is most appropriate to use for analyzing this scenario?

A1:

Q2: Why did you choose this model?

A2:

Q3: List the salient components of the article.

A3:

Q4: List how the article above relates to the component.

A4:

Answer 1

Q1. Mundell fleming model can be used to analyze this scenario.

Q2. This model is chosen because it explains how small economies engage themselves in international trade. It is an extended version of IS-LM model and tells about the growth rate in the economy and its relationship with investrosr expectation and interest rates.  

Q3. Salient components are annual growth, political instability and foreign investment.

Q4. The article relates to the salient components in the way that Annual griowth has fallen because of the terror attacks. The reason is that terror attacks have caused political instability in the economy and that has caused the investors lose their expectations from the economy. This has resulted in a further lowering of GDP.