Choose the most useful model and analyze all interesting economic effects of the following actions. 1....

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Choose the most useful model and analyze all interesting economic effects of the following actions. 1. Cyprus leaves the monetary union and rescues it's banks by setting up a central bank which acts as lender of last resort, increasing the money supply. 2. Cyprus remains in the monetary union and reduces government spending and raises taxes severely to pay debt owed by banks. 3. Japan has a zero nominal interest rate with 7% inflation rate. It adopts a 2% inflation target. 4. Japan joins a trade union eliminating tariffs on imports. (Assume there were no foreign tariffs) 5. The ECB conducts an open market operation, increasing the money supply in Germany. Use two money market equilibrium graphs (one for Germany, one for other EMU countries) to explain what happens to the money supply in other EMU countries. Choose the most useful model and analyze all interesting economic effects of the following actions. 1. Cyprus leaves the monetary union and rescues it's banks by setting up a central bank which acts as lender of last resort, increasing the money supply. 2. Cyprus remains in the monetary union and reduces government spending and raises taxes severely to pay debt owed by banks. 3. Japan has a zero nominal interest rate with 7% inflation rate. It adopts a 2% inflation target. 4. Japan joins a trade union eliminating tariffs on imports. (Assume there were no foreign tariffs) 5. The ECB conducts an open market operation, increasing the money supply in Germany. Use two money market equilibrium graphs (one for Germany, one for other EMU countries) to explain what happens to the money supply in other EMU countries.

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Answer Lets analyze each of the actions using appropriate economic models 1 Cyprus Leaves the Monetary Union Model Optimal Currency Area Theory Analys... View the full answer