23: The Open Economy Macroeconomics | Balance of Payment | Exchange Rate systems | Mundell Fleming

In this lecture, we discuss the open economy or four sectors economy in detail. We discuss the imports and exports, net capital inflow and outflow, the impact of interest rate, fiscal, monetary and trade policies at home as well as at abroad. Then we discussed exchange rates, both real and nominal and how they are determined. We also discussed Spot rate and Forward rate, fixed exchange rate regime and flexible exchange rate regime. Then we discussed open economy IS LM model i.e. Mundell Fleming model and how interest rate and level of output influence exchange rate and trade balance. This is the part of lecture series on Basic Macroeconomics. Let's keep on Learning Economics together. 00:00 What is Open Economy? Open Economy and Close Economy 04:30 International Capital Flow 09:18 Saving and Investment in Open Economy and Trade Balance 19:18 Balance of Payment 28:28 Determination of Exchange Rate 32: 40 Real Exchange rate vs Nominal Exchange Rate 40:35 Purchasing Power Pariety PPP 52:15 Exchange Rate Systems. Flexible or Floating Exchange Rate and Fixed Exchange Rate 59:25 Open Economy IS LM model or Mundell Fleming Model #OpenEconomy #ExchangeRate #ISLMmodel #MundellFleming