Illustrate what effect will each of following events have

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Illustrate what effect will each of the following events have on the current account balance and the exchange rate if the exchange rate is fixed? if the exchange rate if floating? 1. The US government cuts taxes and income rises. 2. The US inflation rate increases, and prices in the US rise faster than those in countries with which the US trades. 3. The US adopts an expansionary monetary policy. Interest rates fall (and are now lower than those in other countries) and income rises. 4. The textile companies' "Buy American" campaign is successful, and US consumers switch from purchasing imported products to buying products made in the US.

Reference no: EM1359236

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