With reference to the IS-LM-BP analysis of a small economy like Ireland, answer the following questions and provide the required explanation and diagrams.

(a)Assuming Ireland trades predominantly within the eurozone, has perfect capital mobility and a fixed exchange rate (Euro), examine the effect that an expansionary monetary policy put in place by the European central bank has for the domestic (Irish) economy.

(b)To counteract the negative effects of the COVID 19 virus on the domestic economy of a small open economy with a flexible exchange rate (such as New Zealand), would you recommend a fiscal or monetary policy response? Use the IS LM BP model to support your answer.

If can, please illustrate diagrams too.