1. © 2007 Pearson Addison-Wesley. All rights reserved Chapter 18 Spending and the Exchange Rate in the Keynesian Model

2. 18-2 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.1 Insulation Under Floating Exchange Rates

3. 18-3 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.2 Dilemma: External Balance or Internal Balance?

4. 18-4 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.3 Policy Combinations That Give External Balance

5. 18-5 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.4 Policy Combinations That Give Internal Balance

6. 18-6 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.5 The Swan Diagram of Internal and External Balance

7. 18-7 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.6 Effect of a Fall in the Interest Rate, I

8. 18-8 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.7 Monetary Expansion

9. 18-9 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.8 Fiscal Expansion with Crowding- Out of Investment

10. 18-10 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.9 Devaluation with Crowding- Out

11. 18-11 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.A.1 Increase in the Exchange Rate with the Laursen- Metzler-Harberger Effect

12. 18-12 Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Figure 18.A.2 External Disturbance under a Floating Exchange Rate