Answer to Question #29061 in Macroeconomics for eneja

Question

Chapter 15
1. Using a flexible exchange rate system with imperfect capital mobility explain the impact that an open economy has on the effectiveness of monetary and fiscal policy.
2. Using a flexible exchange rate system with perfect capital mobility explain the impact that an open economy has on the effectiveness of monetary and fiscal policy.

Chapter 16
1. What are the major policy making bodies within the Federal Reserve System? Explain their composition and function. Explain the differences between M1, M2 and M3.
2. Explain the concept of the money multiplier. What factors determine the size of the money multiplier. How do these factors affect the conduct of monetary policy?

Chapter 17
1. Graph the circumstances under which it is preferable to target monetary aggregates? What are the advantages and disadvantages? Was there ever a time period when this was done? If so, why was it done?
2. Graph the circumstances under which it is preferable to target interest rates? What are the advantages and disadvantages? What are we targeting now and why?

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Answer 1

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