Small open economy starts at long-run equilibrium

Assignment Help Operation Management

Reference no: EM131376416

Suppose that a small open economy starts at a long-run equilibrium. Now assume that a new president gets elected to office and he brings to the government the best 5 economists of the country. At the same time the economy started to grow at a rate above average and is projected to continue growing at such a rate for the next 5 years. All these events cause the risk premium of this country to go down.

Use the Mundell-Fleming model to illustrate graphically the impact of this more favorable risk premium in the short run. Be sure to start from the Keynesian Cross and the Market for Money your analysis, and to label the axes, the curves, the initial equilibrium values, the direction the curve shift and when they do shift, and the short-run equilibrium values. State in words what happens to the nominal exchange rate and output in the short run.

Reference no: EM131376416

Questions Cloud

How do weights of the solid and hollow shafts compare : If a hollow shaft of inside diameter 0.85 times outside diameter is used, what outside diameter would be required to give the same outer surface stress?

Developing and reviewing proposals for budget cuts : Discuss two to three (2-3) challenges an administrator may face when developing and reviewing proposals for budget cuts.

How can you use mis to support your decision making efforts : What types of decision will you need to make to operate your business? How can you use MIS to support your decision-making efforts?

How will they find product information : how will he communicate with his customers? How will they find product information? How will he accept orders? How will he manage payments and shipping? These questions and many more have kept Kirby from making the e-commerce plunge

Small open economy starts at long-run equilibrium : Suppose that a small open economy starts at a long-run equilibrium. Now assume that a new president gets elected to office and he brings to the government the best 5 economists of the country. All these events cause the risk premium of this country t..

How managers can use plans to achieve results : Management challenges in a global and diverse economy. Using technology and social media to develop employees. The role of information in the decision making process. How managers can use plans to achieve results?

Preparing the operating budget : From the e-Activities, discuss two (2) differences between Michigan's budget and your state budget in terms of budget process, financial reporting, and costs analysis (fixed costs, step-fixed costs, and variable costs). Justify your response with ..

How do you see this course enhancing your professional : Post a brief 1-2 page description of what you understand by holisitic nursing and a holistic nursing experience you have had to this Discussion Area.Your description should also include the following:How do you see this course enhancing your profes..

What is the nominal bending stress at the surface : If a hollow shaft of inside diameter 0.5 times outside diameter is used, what outside diameter would be required to give the same outer surface stress?

User Account

All Pages