Explain how this impacts effectiveness of monetary policy

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Derive an IS curve the usual way (create two points), assuming a closed economy. Now assume that an open economy exists. Use this change to derive a new second point on the IS curve (as we did in class) and draw the implied IS curve for an open economy. Explain how this impacts the effectiveness of monetary policy. Is monetary policy more effective in an open or closed economy?

Reference no: EM131389315

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