Some conclusions:

Some conclusions:

- The IS curve for an open economy will be steeper than
the one for a closed economy;

- The position of the IS curve will now also be affected by
changes in the real exchange rate as well as income in the
foreign country.

To understand why the open economy IS curve is steeper than that
of a closed economy, let’s compare the expenditure multiplier of a
closed economy with that of an open economy.