5.2. Use the IS-LM-BP model (chain reactions) to explain the internal and exterr impacts of a decrease in the South African budget surplus on the levels of nation income, interest rates, unemployment, the price level and the exchange rate. Assur that the degree of international capital mobility is high; the exchange rate is floatir th

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5.2. Use the IS-LM-BP model (chain reactions) to explain the internal and exterr impacts of a decrease in the South African budget surplus on the levels of nation income, interest rates, unemployment, the price level and the exchange rate. Assur that the degree of international capital mobility is high; the exchange rate is floatir the interest rate responsiveness of investment is low; and the interest responsiveness of money demand is high. 5.3. Does having a fixed or flexible exchange rate matter for the SARB when consider the effectiveness of monetary policy? Fully explain your answer.

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