Within the Mundell-Fleming model assuming imperfect capital mobility, analyze the effect of a fall in autonomous investment. Focus on the effect on income. Is this effect larger under fixed or flexible exchange rates?(Assume that the BP schedule is flatter than the LM schedule.)

Answer rating: 100% (QA)

Assuming imperfect capital mobility the effect of a fall in autonomous investment under fixed exchange rate can be explained as follows A fall in auto... View the full answer