Problem
1. Use the S - I/X - M graph to show how a country in current account equilibrium responds to a recession abroad. What happens in this graph if the government then adopts a change in fiscal policy to restore the previous level of GDP? Why may this situation be unsustainable?
2. Use the IS/LM/BP graph to show why a domestic monetary contraction will not be effective if a fixed exchange rate is maintained.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.