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The Robert Mundell and Marcus Fleming developed the Mundell-Fleming model to analyse the working of an open economy under different exchange rate regimes. The model is an extension of the IS-LM framework and incorporates international capital mobility, making it highly relevant for understanding macroeconomic policy in a globalised economy. One of the most important conclusions of the model is the effectiveness of monetary and fiscal policy depends largely on the exchange rate system and the degree of capital mobility. Under a fixed exchange rate system with high capital mobility, monetary policy becomes ineffective in _____ _________ _____ ____ ____ _______ ________ ________ ____.
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