Consider a monetary contraction (drop in money supply). Now assume a small open economy model, a high degree of capital mobility and a float. Show in a diagram what happens to the interest rate and output. Also explain intuitively what happens to output, the interest rate and the exchange rate. please draw graph by hand Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Consider a monetary contraction (drop in money supply).
Now assume a small open economy model, a high degree of capital mobility and a float. Show in a diagram what happens to the interest rate and output. Also explain intuitively what happens to output, the interest rate and the exchange rate.
please draw graph by hand
Note:-
- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
- Answer completely.
- You will get up vote for sure.
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