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  3. consider an open economy with a floating exchange

Consider an open economy with a floating exchange rate at equilibrium according in the Mundell-Fleming model...

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Economics

Consider an open economy with a floating exchange rate atequilibrium according in the Mundell-Fleming model at(rf, Y1). Suppose a new financial marketinnovation increases money demand.

Provide a narrative of the economic events experienced in itstransition from the starting point before the shock to the finalequilibrium after the shock. Make sure the narrative is consistentwith the graph. Be sure to describe economic events, not adescription of your graph.

（But please show me a graph, it is easy for me tounderstand)

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