Two Small Open Economies, Fixed and Flex, Can Be Described

Essay

Two small open economies, Fixed and Flex, can be described by the Mundell-Fleming model. The countries are otherwise identical except that Fixed maintains a fixed exchange rate, while Flex maintains a flexible exchange-rate regime. The governments of both countries increase spending by the same amount. Compare what happens in the two countries to:
a.the exchange rate
b.equilibrium output
c.net exports.