Problem
Suppose a flexible exchange rate. There is an increase in the degree of uncertainty in credit markets, which affects firms but not consumers, as considered.
(a) Determine the effects on aggregate output, the price level, the exchange rate, and the real interest rate. Explain your results.
(b) Does this help to explain features of the financial crisis? Discuss.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.