Answer to Question #96430 in Macroeconomics for vainikolo sisifa

Question

IS-LM-BP Model
Goods Market
C = Co + cYD
YD = Y- T +TR
T = To + tY
I = Io – bi
G = Go, TR = TRo
X = Xo + λθ + γYf
M = IMo + mY – ψθ

Money Market
L = kY - hi
Ms/P = Mo/P + ΔRE/P

Foreign Exchange Market
NX = NXo – mY + vθ + γYf
CF = CFo + f (i – if)
ΔRE/P = NX + CF
Endogenous Variables: C, YD T, I, X, IM, L, Ms, CF, NX, Y, i and .RES/P
Exogenous Variables: Co, To, Io, Go, TRo, Xo, Yf, IMo, Mo, CFo, NXo, i, if and P
Parameters: c, t, b, λ, γ, ψ, m, f, k, h and v
Policy variables: Fiscal policy: (G, t and TR) Monetary policy: (Mo, P) and Exchange Rate: (θ)

1. Explain the general role of parameters λ, γ, ψ, m, f, k, h, v in the algebraic model (2 marks)
2. For the macroeconomic model given, identify the ER (exchange rate) system and the extent of capital mobility (perfect or imperfect) in this economy. (2 marks)

Answer 1

Dear vainikolo sisifa, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order