1.The foreign and domestic economies are initially at potential GDP. The domestic economy is small and the foreign economy is large. The exchange rate is floating and capital is perfectly mobile. Assume a Keynesian model so that adjustment to any shock is lagged. Using the AD-AS model analyze the short run impact on domestic X M, I, C, Y, P and E for the following shock: Environmental toxins discharged into water result in 15 percent of domestic farmland being rendered useless for cultivation.