Question: Question 1 a. Graphically illustrate and explain the exchange rate regime over a 15-year period for two small open Caribbean economies. One must have an

Question 1 a. Graphically illustrate and explain the exchange rate regime over a 15-year period for two small open Caribbean economies. One must have an exchange rate system that is fixed or pegged and the other a floating exchange rate system. (6 marks)

b. Use the Mundell-Fleming model with perfect capital mobility, for each economy, analyze why the effectiveness of monetary, fiscal, and trade policies depend on the exchange rate regime in place in a country. (9 marks)

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