2. Use the money market and FX diagrams to answer the following questions. This question considers the relationship between the Indian rupee (Rs) and the U.S. dollar ($). The exchange rate is in rupees per dollar, ERS/$. On all graphs, label the initial equilibrium point A. a. Illustrate how a permanent decrease in India's money supply affects the money and FX markets. Label your short-run equilibrium point B and your long-run equilibrium point C. b. By plotting them on a chart with time on the horizontal axis, illustrate how each of the following variables changes over time (for India): nominal money supply MIN, price level PIN. real money supply MIN/PIN, interest rate igs, and the exchange rate ERS/$. c. Using your previous analysis, state how each of the following variables changes in the short run (increase/decreaseo change): India's interest rate Rs, ERs/s, expected exchange rate ERs/$e, and price level PIN. d. Using your previous analysis, state how each of the following variables changes in the long run (increase/decreaseo change relative to their initial values at point A): India's interest rate iRs, ERS/S, ERs/Se, and India's price level PIN. e. Explain how overshooting applies to this situation