Remember that our version of the basic IS-LM model applies to a closed economy. The IS*LM* model (Mundell-Fleming) applies to an open economy. 5. Give an example of a stimulative fiscal or monetary policy action that the US government implemented in response to the COVID-19 pandemic. 6. Consider a small open economy with a floating exchange rate. Draw an IS*-LM* graph depicting what happens if the government raises government purchases. Make sure the effects (if any) on e and Y are clear