The Mundell-Fleming model provides a hypothesis that the movement of nominal value (e) can affect fluctuations in output (Y). If it is defined as the ratio between foreign and domestic currencies, then answer the following questions: a) Explain the conditions so that the condition r = r* can be met! b) Derive the IS-LM curve for the Mundell-Fleming Model and its difference with the IS-LM curve for a closed economy! c) If a country adopts a fixed exchange rate system, how will it affect the independence of domestic monetary policy? Complete your argument with the IS-LM curve.

Consider the basic Macroeconomic model involving:        Private sector consumption: C = co+c1(Y-T); Y = GDP, T = Taxes        Tax function: T = to+t1Y        Business sector investment: I = io+i2r, r=interest rate        Government spending: G = Go        Exports: X = xo+x1x; x = Exchange rate of the dollar        Imports: M = mo+m1Y+m2x; x = Exchange rate (a) Identify and explain the parameters: co, t1, i2, and m2. (b) Solve this model for the equilibrium GDP (Y*).

Explain the circular-flow model of the economy in terms of resource and monetary flows. Discuss the role of injections and withdrawals within this model. What are the limitations of this model of the economy?

Effect of fiscal and monetary policy on economic fluctuation in Zimbabwe

QUESTION 29 The DoDo Bird Co., a U.S.-based MNC has applied the following regression model to estimate the sensitivity of its cash flows to exchange rate movements PCF; = ao + bęet + Ut Where the term on the left hand-side is the percentage change in the inflation adjusted cash flows measured in U.S. dollars over period t and eț is the percentage change in the exchange rate of the euro (versus the dollar; number of dollars required to buy one euro) over period t. The regression model estimates a coefficient of bt equal to 0.5. This indicates that: O a. If the euro appreciates by 1%, DoDo Bird's dollar cash flows will decline by .5%. O b. If the euro depreciates by 1%, DoDo Bird's dollar cash flows will increase by 2%. O c. If the euro depreciates by 1%, DoDo Bird's dollar cash flows will decrease by 2%. Od.If the euro depreciates by 1%, DoDo Bird's dollar cash flows will decline by .5%. O e. None of the above QUESTION 30 The 2017 Tax Cuts and Jobs Act: O a. Lowered corporate tax rate…

Assume a model economy with the following parameters: C=300+0.25 Yd I=250+0.5Y-2500i G=350 T=300 (M/P)d= 4Y-16,000i (M/P)s= 880   Derive the IS and LM relations and solve for equilibrium real output and equilibrium interest rate.

What would be the impact of an appreciating currency on aggregate demand? a) Decrease b) Increase

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Sometimes understanding of ISLM becomes clearer when one works through the algebra. This question is designed to promote such understanding. Consider Country A, a closed economy characterized by the following relationships: C = 200 + 0.5YD I = 70- 5r G = T = 100 MD = 500 + Y – 15i where YD, disposable income, is equal to income less taxes, Y-T, and r and i are the real and nominal interest rates expressed in percent. Country A is ruled by a fierce dictator who abhors price movements, so assume prices are not allowed to change in this economy, i.e., that i = r. a) Assume that the Central Bank of Country A sets the nominal interest rate at 4% (r=4) and keeps it at that level. Find consumption, investment and output in equilibrium.  b) What money supply is consistent with a real interest rate of 4 percent? Given this money supply, show that saving equals investment.

Using the IS-LM model, explain why there has been a decline in growth (national income) due to the COVID-19 pandemic