Assume the country begins in external balance

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Capital mobility is fairly high, so the fe curve is more shallowly sloped than the lm curve. the country has a fixed exchange rate. Using is-lm-fe analysis, show what will happen if the country pursues an expansionary fiscal policy. Use graphs and explain, in words, what is shifting and why. Assume the country begins in external balance.

Reference no: EM13831900

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