Question

IS LM BP Model

Assume imperfect capital mobility. If the last digit of your student ID is an eben number (0,2,....8) assume a fixed exchange rate. If it is an odd number (1,3,...9) assume a flexible exchange rate. If thnlast degit of your student ID is less than 5 (0-4), assume that the BP schedule is flatter than the LM schedule. Analyze the effect of an expansionary fiscal policy. Draw the IS-LM-BP model. Explain in details.

my last id degit is 3

Answer 1

As yours last digit is 3 which is an off Number, so there is a flexible echange rate in which exchange rate is flexible. So there is a expansionary fiscal policy under flexible exchange rate .