1. Chapter 26 Economic Policy in the Open Economy: Flexible Exchange Rates

15. Fiscal policy: graphical analysis IS IS’ IS’ IS = IS” IS’ IS IS’ IS BP LM LM LM LM i BP BP BP Y i i i Y Y Y BP’ BP’ BP’ Y 0 Y 2 Y 0 Y 0 Y 0 i 2 Y 2 Y 2 IS’’ i 2 i 0 i 0 IS’’ IS’’ i 2 i 0 i 0

23. Monetary policy: graphical analysis IS IS’ IS’ IS IS’ IS IS’ IS BP LM’ LM’ LM LM LM LM’ LM LM’ i BP BP BP Y i i i Y Y Y BP’ BP’ BP’ Y 0 Y 2 Y 0 Y 0 Y 0 i 2 Y 2 Y 2 Y 2 i 0 i 2 i 2

28. Fiscal policy only Y 0 Y FP Y* i 0 Y i FP i* IS BP IS’ FP IS FP BP FP LM i

30. Monetary policy only Y 0 Y MP Y* i 0 Y i MP i* IS BP IS’ MP BP’ MP LM LM MP i

32. You do: What combination of fiscal and monetary policy will reach (Y*,i*) Y 0 Y* i 0 Y i* IS BP LM i

34. Foreign price shock Y 0 i 0 Y IS BP IS LM BP i

41. Domestic price shock Y 0 i 0 Y IS BP’ IS’ LM BP LM’ i

45. Foreign interest rate shock Y 0 i 0 Y IS BP’’ IS’ LM BP BP’ i

47. Foreign interest rate shock Y 0 i 0 Y IS BP’’ IS’ LM BP BP’ i LM’