Curve lm y is lm bp analysis floating exchange rates

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Unformatted text preview: r1 a b Depreciation causes the IS curve to shift to the right IS2 IS1 O Y1 Y2 An expansionary fiscal policy: BP curve steeper than LM curve LM Y IS-LM-BP analysis: floating exchange rates r r3 r2 r1 BP1 a b c BP2 LM Full equilibrium is achieved at point c IS3 IS2 IS1 O Y1 Y2 Y3 An expansionary fiscal policy: BP curve steeper than LM curve LM Y IS-LM-BP analysis: floating exchange rates Effect of an expansionary Effect monetary policy under floating exchange rates IS-LM-BP analysis: floating exchange rates r LM1 LM2 BP1 r1 a r2 b IS1 O Y1 Y2 An expansionary monetary policy Y IS-LM-BP analysis: floating exchange rates r LM1 LM2 BP1 r1 a r2 b The balance of payments deficit causes the BP line to shift downward IS1 O Y1 Y2 An expansionary monetary policy Y IS-LM-BP analysis: floating exchange rates r LM1 LM2 BP1 r1 a r2 b The depreciation causes the IS curve to shift to the right IS1 O Y1 Y2 An expansionary monetary policy Y IS-LM-BP analysis: floating exchange rates r LM1 LM2 BP1 r1 r3 a r2 BP2 c b Full equilibrium is restored at point c IS2 IS1 O Y1 Y2 Y3 An expansionary monetary policy Y...
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