Problem4 ( 20 Points ) Suppose that the current account and capital account sum to a number biggerthan zero at the equilibrium real income nominal interest combination that is at the intersection of the IS LM curves Would the IS LM equilibrium point lie above or below the BP schedule explain your reasoning What type of monetary policy would you recommend to the FED to solve the problem of balance of payment ( i e Deficit or Surplus )

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Question: Problem4 ( 20 Points ) Suppose that the current account and capital account sum to a number biggerthan zero at the equilibrium real income -nominal

Problem4 ( 20 Points )

Suppose that the current account and capital account sum to a number biggerthan zero at the equilibrium real income -nominal interest combination that is at the intersection of the IS-LM curves .

Would the IS-LM equilibrium point lie above or below the BP schedule ? explain your reasoning .
What type of monetary policy would you recommend to the FED to solve the problem of balance of payment ( i.e Deficit or Surplus )

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