Supplemented by the uncovered interest parity condition

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Reference no: EM131104308

Use the open economy IS-LM model supplemented by the uncovered interest parity condition. If a nation with flexible exchange rates wanted to expand real GDP while avoiding a trade deficit, should it rely on fiscal policy or monetary policy? Illustrate your analysis graphically (discuss both options) and explain in detail how each policy works. Be sure you clearly present all equations and label all graphs.

Reference no: EM131104308

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