Question: (a) Using the DD-AA model, explain how the exchange rates, interest rates, trade balance and output adjust to their new equilibrium levels when the money

(a) Using the DD-AA model, explain how the exchange rates, interest rates, trade balance and output adjust to their new equilibrium levels when the money supply decreases temporarily.

(b) Using the DD-AA model, explain why a temporary fiscal expansion may be less effective than the government originally expects it to be.

*** For whoever that is answering this on Chegg, please don't copy some nonsense from somewhere. I'll report you for incorrect and spamming. I'll also downvote your answer. I'm asking this same question again because I have asked this same question before, but have been provided with the wrong answers. ***

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