Homework (Ch 15) REAL GDP Suppose the Federal Reserve decides to sell bonds in order to decrease the money supply. Complete the following paragraph to show the effects of such a policy in an open economy. Because this is monetary policy, aggregate demand will , which causes both real GDP and the price level to . In a closed economy, this is the total effect of such a policy. However, in an open economy, it is necessary to consider changes to interest rates and thus the exchange rate. Since this kind of monetary policy interest rates, this means that American securities become attractive to foreign investors. This currency aggregate demand and supply. ▼aggregate X

Please do the work handwritten if you can and include the names of the formulas used and any other rules that need to be followed when solving these problems.

2. The Ricardian Model and Argentina Below are several questions about the Ricardian Model in the context of Argentina as a small open economy (Argentina takes world prices as given). Some information about Argentina: Argentina can produce two goods: manufactures and beef. The technology to produce manufactures and beef both only use labor and they have constant marginal products of labor. The marginal product of labor in manufactures is 3. The marginal product of labor in beef production is 8. a. In autarky (i.e. no international trade) what is the relative price of beef to manufactures? b. Suppose that Argentina is a "small open economy", that is it takes world prices as given and Argentina will have no impact on international supplies and prices. If the world relative price of beef to manufactures is 1/2, will international trade benefit those in Argentina? If so, what product will Argentina export? What product will it import? c. Suppose that Argentina's labor force equals 100…

Sub : EconomicsPls answer very fast.I ll upvote. Thank You a small open economy is described by the following equations: C = 50 + .75(Y-T) I = 200 - 20r NX = 200 -50e M/P = Y -40r G = 200 T = 200 M = 3000 P = 3 r* = 5 a. Derive and graph the IS* and LM* curves. b. Calculate the equilibrium exchange rate, level of income, and net exports c. Assume a floating exchange rate. Calculate what happens to the exchange rate, the level of income, net exports and the money supply if the government increases spending by 50. Use graph to illustrate what you find. d. Now assume fixed exchange rate. Calculate what happens to the exchange rate, the level of income, net exports and the money supply if the government increases spending by 50. Use graph to illustrate what you find.