Refer to Figure 31. Consider that the U.S. economy is initially at the long-run point 1 and that there is a permanent increase in government spending. Then, the DD schedule ...(E = $/) Figure 31. Exchange rate, E DO DO 9 1 A4 44 Y y Output, Y 1) shifts to the right and the exchange stays the same. 2) shifts to the right and the exchange rate increases. 3) shifts to the right and the dollar appreciates. 4) shifts to the right and the dollar depreciates