What will happen to the relative holdings of foreign assets

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Reference no: EM132177311

Question: 1. Explain carefully why a country settles in equilibrium at the intersection of the IS, LM, and BP curves.

2. Why is domestic monetary policy ineffective in an open economy under a fixed exchange rate regime?

3. What will happen to the relative holdings of foreign and domestic assets by the home country if there is an increase in the money supply and capital is perfectly mobile? Why?

Reference no: EM132177311

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