A further look at Table 18-1 Table 18-1 has four entries. Using Figure 18-5 as a guide, draw the situations illustrated in each of the 4 entries in Table 18-1. Be sure you understand why the direction of change in government spending and the real exchange rate is labeled as ambiguous in each entry.

Table 18-1

Figure 18-5

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Table 18-1 Exchange Rate and Fiscal Policy Combinations Initial Conditions Low output High output Trade Surplus Trade Deficit E? G E G? EG? ? G