The figure below shows an IS-LM-FE model for an economy with fixed exchange rates. Initially the economy was at point A, a triple intersection. Here, the FE curve is flatter than the LM curve. 
In order to maintain the fixed exchange rate, at point B monetary authorities must:
Definitions:
Annual Coupon
The total interest payments made to bondholders each year, expressed as a percentage of the bond's face value.
Debt
Debt refers to the amount of money borrowed by one party from another, subject to repayment along with interest, used by businesses and governments to finance operations or projects.
Leveraged Capital Structure
A financial structure of a company that involves a significant amount of debt in its capitalization, increasing potential returns to equity holders but also risk.
Unleveraged
Describes a situation or investment that does not involve borrowed funds or debt.
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