Q5 Consider a small open economy in the short run. .
(a) Given a floating exchange rate sketch a graph of a tax decrease.
(b) What direction (+/-/or no change) does the tax decrease impact: Y, r, e, C and NX Y______ r ______ e ______ C ______ NX ______
(c) Given a fixed exchange rate sketch a graph of trade tariffs.
(d) What direction (+/-/or no change) does the tax decrease impact: Y, r, e, and C Y______ r ______ e ______ C____ NX ______
