Question

1. The derivation and definition of DD-AA curves (and factors that shift them). 2. What are...

1.

The derivation and definition of DD-AA curves (and factors that shift them).

2.

What are the effects of temporary monetary and fiscal policies under flexible vs. fixed exchange rate systems in the short run? Show using both the FX and Money Market graphs and the AA-DD model

.

3.

Real exchange rate and its relationship with trade balance, volume vs. value effects, J-curve.

4.

How do the Central Banks intervene in the FX market to keep exchange rates fixed? What is sterilization?

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