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Exhibit: IS*-LM* a Small Open Economy with a Fixed

Question 26

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Exhibit: IS*-LM* Exhibit: IS*-LM*   A small open economy with a fixed exchange rate e<sub>2</sub> is initially at equilibrium A with IS<sub>1</sub>*, LM<sub>1</sub>* and equilibrium output Y<sub>1</sub>. If there is a monetary expansion, the new equilibrium will be at _____, holding everything else constant. A) A B) B C) C D) D A small open economy with a fixed exchange rate e2 is initially at equilibrium A with IS1*, LM1* and equilibrium output Y1. If there is a monetary expansion, the new equilibrium will be at _____, holding everything else constant.


A) A
B) B
C) C
D) D

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