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We’ve now built our basic model for an open economy in the Medium Run the Mundell-Fleming model The best way to understand it is to build it yourself Hence your task here is to build

We’ve now built our basic model for an open economy in the Medium Run, the Mundell-Fleming

model. The best way to understand it is to build it yourself. Hence your task here is to build a

Powerpoint slide – a single slide is enough, and the maximum – showing the IS-LM / AD-AS / IP

model. Assume now a contractionary Monetary Policy. Use animation of the curves, showing shifts in

the curves in the correct sequence and explained by textboxes, to show the effect of this Monetary

Policy in the Short Run and the Medium Run. The Lecture Video provides an exact template of the

basic model – at its simplest, your Powerpoint slide could closely imitate the contractionary MP slide in

the lecture. However note that the Lecture Video simplifies the process greatly – as with any model, it

is an abstraction from reality. Your Powerpoint therefore can aim for greater complexity and therefore

greater reality. Keep in mind that the exchange rate will ‘overshoot’, and then return back towards the

original level. Does the Lecture Video slide directly show this? (It does not, as part of the process of

abstraction). So as you see in your own Powerpoint the exchange rate or other variables changing,

consider carefully the effect this will have on the curves in other quadrants, and as much as possible,

show this in your animated slide. As a result of this you will certainly see more Aggregate Demand

curves than the three seen in the Lecture Video, and you can show these extra curves in your own

slide. (But again, if your slide resembles the Lecture Video slide, you will have completed the exercise

to the basic level required

Apr 29 2020 View more View Less

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