In 2016, United Kingdom voted to leave the European Union. On Marsh 29, 2019 the Brexit AKA secession from the Union is schedule to take place.
The referendum results and the approaching date of the secession have negatively affected business environment in the UK leading to a growth rate slowdown in the Kingdom.
Explain how the Brexit( and the expectation of the Brexit) affect the U.S. economy. Using all the ISLM and ADAS diagrams illustrate the effect of the Brexit on the U.S. economy. Label all curves and axes.
Write formulas for each of the curves what could the U.S. Central Bank do to stabilize the economy Illustrate its actions on ISLM and ADAS diagram. List all monetary policy tools (but do not explain how they work).
Suppose the Central Bank does not take any actions. What could the U.S government do to stabilize the economy? Illustrate its actions on the ISLM and ADAS graphs (I Suggest drawing a new set of diagrams rather than using ones form (2)).
What happens to the interest rate monetary policy actions? What happens to the interest rate after fiscal policy actions? Explain the intuition for your result