Question: Please provide detailed step by step solution for the following: 2. Explain the equilibrium effects on the nominal exchange rate, private domestic consumption, domestic investment,

Please provide detailed step by step solution for the following: 2.

Please provide detailed step by step solution for the following:

2. Explain the equilibrium effects on the nominal exchange rate, private domestic consumption, domestic investment, the domestic nominal interest rate, domestic net-exports of two possible policies of your choice (one monetary and one fiscal) to keep the domestic output/income unchanged following a reduction in the foreign output/income. (20 Points)

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