The Mundell-Fleming model assumes that price levels are:  A. Sticky in the short run and flexible in the long run  B. Flexible in the short run and sticky in the long run  C. Completely fixed in both the short and long run  D. Independent of changes in output and employment

Suppose that the price level is currently too high to allow the economy to produce the natural rate of output. The Mundell–Fleming model in the long run predicts that the price level will decrease, causing the LM* curve to shift _____ in order to bring the economy to equilibrium.to the rightto the leftupwarddownward

The Mundell–Fleming model is a model of the:closed economy in the short run.open economy in the short run.closed economy in the long run.open economy in the long run.

Select the statement which incorrectly explain the behavior of the economic impact under Mundell-Fleming Model.A.1.      In a small open economy with fixed exchange rate, IS* and LM* curves will shift to right under expansionary fiscal policy and output is increased.B.1.      In a small open economy with fixed exchange rate, monetary policy is ineffective while fiscal policy is effective.C.1.      In a small open economy with floating exchange rate, monetary policy is effective while fiscal policy is ineffective.D.1.      In a small open economy with floating exchange rate, IS* curve will shift to right under expansionary fiscal policy and output is increased.

Select all correct statements below.Note: This is a multiple-answer question; thus, more than one option may be correct.a.To model economic development, we assume sticky prices.b.We assume prices are flexible in the long run.c.In the short run, prices adjust to ensure market clearing.d.To model fluctuations in output, we assume sticky prices

In the Mundell-Fleming model, the current account is not required to balance, neither in the short-run nor in the long-run equilibrium