Use the Mundell-Fleming Model (IS*-LM Model) to graphically illustrate the effects to the economy to each of the following shocks. For each shock graphically illustrate the effects under both a floating and fixed exchange rate system. [i. e. Each part will have two (2) graphs showing each exchange rate system]. [8 Points each (a) An import tariff (tax on imports)
(b) An decrease in consumer confidence about the future economy which induces households to spend less and save more
(c) An expansionary fiscal policy.

The new york times (nov. 30, 1993) reported that “the inability of opec to agree last week to cut production has sent the oil market into turmoil . . [leading to] the lowest price for domestic crude oil since june 1990.” why were the members of opec trying to agree to cut production? so they could save more oil for future consumption so they could lower the price so they could raise the price why do you suppose opec was unable to agree on cutting production? because each country has a different production capacity because each country experiences different production costs because each country has an incentive to cheat on any agreement the newspaper also noted opec’s view “that producing nations outside the organization, like norway and britain, should do their share and cut production.” what does the phrase “do their share” suggest about opec’s desired relationship with norway and britain? opec would like norway and britain to keep their production levels high. opec would like norway and britain to act competitively. opec would like norway and britain to join the cartel.