The Movement to More Flexible Exchange Rates Has Made It

question 22

Essay

The movement to more flexible exchange rates has made it necessary to more fully coordinate the use of monetary and fiscal policy. Explain why this is so, using the IS/LM/BP model, an income target, and an interest rate target.

---

Definitions:

Industry Demand

The total demand for products or services within a particular industry or sector.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to a state of market balance.

Number of Firms

It refers to the total count of enterprises operating within a certain market or industry.

Industry

A sector of the economy that produces a related set of goods or services.