As a review of the theoretical discussion of the IS-LM-BP model, do the following exercises: a)...

As a review of the theoretical discussion of the IS-LM-BP model, do the following exercises:

a) Using the IS-LM-BP model, explain the effect of restrictive monetary policy on output when there is a flexible exchange rate regime and perfect capital mobility.

b) How does the analysis in (a) changes if there is not perfect capital mobility?

c) Using the IS-LM-BP model, explain how, with a fixed exchange rate regime, the government can reduce unemployment with a combination of expansionary fiscal policy and contractionary monetary policy.

Expert Solution

Rahul Sunny answered 2 years ago

Explain in detail the policy conclusions of the IS/LM/BP model

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As a review of the theoretical discussion of the IS-LM-BP model, do the following exercises: a)...

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Explain in detail the policy conclusions of the IS/LM/BP model

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