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12 Mar 2018
In 2005 the US was close to full employment, but many observers andeconomists
were worried about its trade deficit, which was over $700 billionper year. Suppose
macroeconomic policymakers wanted to maintain the level of real GDPin the short
run but change the real exchange rate to reduce the trade deficit.Assuming that the
US is a large open economy, state which specific monetary and/orfiscal policies
would be required to achieve these objectives in the short run?Briefly explain using
the Mundell-Fleming model and appropriate graphs.
In 2005 the US was close to full employment, but many observers andeconomists
were worried about its trade deficit, which was over $700 billionper year. Suppose
macroeconomic policymakers wanted to maintain the level of real GDPin the short
run but change the real exchange rate to reduce the trade deficit.Assuming that the
US is a large open economy, state which specific monetary and/orfiscal policies
would be required to achieve these objectives in the short run?Briefly explain using
the Mundell-Fleming model and appropriate graphs.
1
answer
0
watching
91
views
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Reid WolffLv2
14 Mar 2018