Suppose that firms in Boversia gain confidence in the economy, so domestic in-vestment rises for any given

Question:

Suppose that firms in Boversia gain confidence in the economy, so domestic in-vestment rises for any given interest rate. For now, assume that net capital outflows don’t change. Using graphs, show what happens to output and the real under three assumptions about Boversia’s monetary policy:
a. The central bank holds the real interest rate constant.
b. The central bank adjusts the real interest rate to keep output constant.
c. The central bank adjusts the real interest rate to keep the real constant. Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...