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28 Sep 2019
Suppose that you are a government official in charge of your countryâs fiscal policy. The country maintains a flexible exchange rate system. You are asked by your countryâs citizens to use fiscal policy alone to expand the countryâs output and to reduce its trade deficit simultaneously. Use the IS-LM diagram to answer the following
A) Is it possible for you to obtain these two goals using only fiscal policy?
B) Suppose instead that you were in charge of the country's money supply. Is it possible for you to obtain these goals using monetary policy?
C)Now suppose that the country has a fixed exchange rate system. Is it possible to use either monetary and fiscal policy to lower the trade deficit and expand national output simultaneosly?
Suppose that you are a government official in charge of your countryâs fiscal policy. The country maintains a flexible exchange rate system. You are asked by your countryâs citizens to use fiscal policy alone to expand the countryâs output and to reduce its trade deficit simultaneously. Use the IS-LM diagram to answer the following
A) Is it possible for you to obtain these two goals using only fiscal policy?
B) Suppose instead that you were in charge of the country's money supply. Is it possible for you to obtain these goals using monetary policy?
C)Now suppose that the country has a fixed exchange rate system. Is it possible to use either monetary and fiscal policy to lower the trade deficit and expand national output simultaneosly?
Divya SinghLv10
28 Sep 2019
