Question: 1. a. Discuss how a temporary increase in output in a foreign economy affects the DD schedule: b. Discuss how a temporary rise in the

1. a. Discuss how a temporary increase in output in a

1. a. Discuss how a temporary increase in output in a foreign economy affects the DD schedule: b. Discuss how a temporary rise in the foreign interest rate affects the AA schedule: c. The response of the interest rate and output for a closed economy to a fiscal expansion is: The response to a monetary expansion is: d. Compare the effects of a foreign fiscal expansion to a foreign monetary expansion (hint: you will need to use your results from parts (a), b) and (c). Do not worry about additional feedback effects from the domestic economy to the foreign economy). What can we find in comparing these results

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