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Output in a fixed exchange rate regime

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Reference no: EM131048960

1. Assume the exchange rate is allowed to fluctuate freely. Using the IS-LM-IPmodel, graphically illustrate and explain what effect monetary expansion will have on the domestic economy. In your graphs, clearly label all curves andequilibria.

2. To what extent can monetary policy be used to affect output in a fixed exchange rate regime? Explain.

Reference no: EM131048960

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