3. For each of the following situations, use the ISLM-

FX model to illustrate the effects of the shock. For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, and TB. Assume the government allows the exchange rate to float and makes no policy response.

a. Foreign output decreases.

b. Investors expect a depreciation of the home currency.

c. The money supply increases.

d. Government spending increases.