Euro-zone economies are underperforming

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For several years the euro-zone economies are underperforming. In other words, . Recently, the ECB reduced the policy interest rates from 1.5% to 0.5% and hinted further monetary easing. Consider the euro-zone as a large open economy under floating exchange rates. Using the large open economy model, illustrate and explain what may happen to r, Y, C, I, CF, e, and NX as a result of this policy change.

Reference no: EM131098298

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