The Mundell-Fleming model Is curve and ex-rate (Is curve is drawn for a given ex-rate) EX-ratet> domestic currency. →M&EX(NX →| s shifts →Y
The Mundell-Fleming Model IS curve and ex-rate (IS curve is drawn for a given ex-rate) Ex-rate↑ → domestic currency____ → IM ___ & EX ___ (NX__) → IS shifts _____ → Y _____
The Mundell-Fleming model What if domestic> rk LM Is(e) Y
The Mundell-Fleming Model ◼ What if domestic r > r* r Y IS (e) LM r*
The Mundell-Fleming Model 2. The model on a Y---e graph 1) Goods market>IS* curve E=C(Y-D+l(r)+G+ NX(e)y=f E e1 E e2 NX(e) NX e1 2 Y1 Y2
The Mundell-Fleming Model 2. The model on a Y --- e graph 1) Goods market → IS* curve E = C (Y-T) + I (r*) + G + NX (e) e2 e2 E Y Y=E E e1 Y1 Y2 IS* e Y e1 NX e NX(e)
The Mundell-Fleming Model 2)Money market and LM curve M/P=L(rK, Y) LM
The Mundell-Fleming Model 2) Money market and LM* curve M/P=L (r*, Y) r Y Y LM e r* LM*
The Mundell-Fleming model 3)|S*&LM* LM Y
The Mundell-Fleming Model 3) IS* & LM* e Y IS* LM*