What would happen to aggregate income

Reference no: EM13935040

Question: Use the Mundell-Fleming model to predict what would happen to aggregate income, the exchange rate, interest rate and the trade balance of a small open economy under both floating and fixed exchange rate regimes in response to each of the following shocks:

A/A shift in preferance of domestic consumer to foreign goods

B/A Nincrease in investores pessimism about the profitability of investment in the country.

Reference no: EM13935040

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