Business, 06.05.2020 03:25 anaroles04

The Mundell-Fleming model takes the world interest rate r as an exogenous variable. Letís consider what happens when this variable changes. (a) What might cause the world interest rate to rise?(b) In the Mundell-Fleming model with a áoating exchange rate, what happens to aggregate income, the exchange rate, and the trade balance in a small open economy when the world interest rate rises? (c) In the Mundell-Fleming model with a Öxed exchange rate, what happens to aggregate income, the exchange rate, and the trade balance in a small open economy when the world interest rate rises?

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The Mundell-Fleming model takes the world interest rate r as an exogenous variable. Letís consider w...