3. Using the IS/LM/BP model, demonstrate the effect of each

3. Using the IS/LM/BP model, demonstrate the effect of each of the following changes. Assume that the economyis a small country with perfect capital mobility (so a flat BP curve) and a fixed exchange rate (non-sterilizedintervention). a. An increase in tax rates b. An increase in government purchases c. An increase in the domestic money supply d. A fall in GDP in the rest of the world e. An increase in the domestic price level 4. Using the IS/LM/BP model, demonstrate the effect of each of the following changes. Assume that the economyis a small country with perfect capital mobility (so a flat BP curve) and a flexible exchange rate (non-sterilizedintervention). a. An increase in tax rates b. An increase in government purchases c. An increase in the domestic money supply d. A fall in GDP in the rest of the world e. An increase in the domestic price level 5. Using the IS/LM/BP model, demonstrate the effect of each of the following changes. Assume that the economyhas an upward sloping BP curve (that is flatter than the LM curve) and a fixed exchange rate (non-sterilizedintervention). a. An increase in tax rates b. An increase in government purchases c. An increase in the domestic money supply d. A fall in GDP in the rest of the world e. An increase in the domestic price level 6. Using the IS/LM/BP model, demonstrate the effect of each of the following changes. Assume that the economyhas an upward sloping BP curve (that is flatter than the LM curve) and a fixed exchange rate (non-sterilizedintervention). a. An increase in tax rates b. An increase in government purchases c. An increase in the domestic money supply d. A fall in GDP in the rest of the world e. An increase in the domestic price level