Task 6 Assess possible events that might affect these markets. Use the IS LM BP model...

Task 6

Assess possible events that might affect these markets. Use the IS LM BP model to frame your analysis:-What if:

There was either expansionary fiscal or monetary policy
What if relative interest rate rise (fall)
What if social and political concerns impact trade

Task 7

How exposed is the market to external shocks (e.g trade flows / NX)
How exposed is the economy to internal shocks (eg. fluctuations in demand for money / regional shocks )
Specify the exchange rate regime and analyse the risks inherent in that exchange rate regime
what type of policy interventions are likely given the country context - Monetary? / Fiscal?

Expert Solution

Expansionary fiscal policy leads to a rightward shift in the IS curve and an expansionary monetary policy leads to a rightward shift in the LM curve.

*Please refer to the handwritten notes

Rahul Sunny answered 2 years ago

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