using an IS-LM-FE diagram as an aid, show the effect on a small
open economy of a permanent increase in the full-employment level
of output. assume flexible exchange rates and assume that the
domestic interest rate does not deviate from the foreign interest
rate. explain what happens to output, the price level, net exports,
the nominal exchange rate, and the real exchange rate. ( Please
provide your answer in word format. not in your handwriting)