1.Expansionary fiscal policy
under flexible exchange rate, 
means increase of Government
spendings (G), increasing the
aggregate demand (yd) and the 
income, yd > y = excess demand
of goods, leading to a shift of
IS curve to the right to IS'
from E0 to E1

2.There will be a balance 
surplus 
i> i*, domestic interest rate
is higher than world interest
rate, leading to a capital 
inflows = investors seek to
buy home currency and sell
foreign currency

So e (nominal exchange rate)
decreased = appreciation of
home currency,

That means that fewer unit 
of home currency are needed
to buy one unit of foreign
currency.

¤ (real exchange rate)
decreased = appreciation
of the real exchange rate

¤ = P*e / P = price of 
foreign goods expressed in
home currency / price of 
home goods

¤ decreased = increased of
imports and decreased of
exports, leading to shift
of the IS curve to the left
from IS' to IS from E1 to
E0, with EO new equilibrium

3. At the end, for same
interest rate, Y is the same
so fiscal policy under
flexible exchange rate is
ineffective