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QUESTION
4) Assume the exchange rate is allowed to fluctuate freely. Using the IS-LM-IPmodel, graphically illustrate and explain what effect monetary...
4) Assume the exchange rate is allowed to fluctuate freely. Using the IS-LM-IPmodel, graphically illustrate and explain what effect monetary expansion willhave on the domestic economy. In your graphs, clearly label all curves andequilibria.5) To what extent can monetary policy be used to affect output in a fixed exchangerate regime? Explain.
