Assignment:
In-Class Assignment: Stabilization Policies in an Open tconwriy
Will focus on a model that explains short-run fluctuations of output in an open economy and the feasibility of monetary and fiscal policies in stabilizing the economy. For this assignment, you will do some research to gain necessary background information about this model and the policy context. You can use your textbook and the internet for your research. This is an individual assignment. Please submit your answer on Canvas.
1. How did the Great Depression change the economic profession's view about business cycle?
2. Who created the IS-LM model? Whose work was the model based on?
3. Who extended the IS-LM model to a small open economy? What contribution did he make to the model?
4. What were the monetary and fiscal policy responses in the U.S. during the Great Depression? Were they contractionary or expansionary?
5. What was the monetary policy response in the U.S. in early 1980s after the second oil crisis? Was it contractionary or expansionary?
6. What was the fiscal policy response in Germany after the reunification of East and West Germany in 1990? Was it contractionary or expansionary?
7. What were the monetary and fiscal policy responses in the U.S. during the Great Recession? Were they contractionary or expansionary?