Let the economy be described by the AD-AS model for a small open economy with fixed exchange rates, such as Litl.Litl is currently in long-run equilibrium.

The new government has promised to dramatically increase the stock of housing in Litl in the short run. It does this through an increase in current government expenditures.

The government promises to sustain this policy until all who want houses have houses.Can it?Explain the economy in the medium run.