Assume prices do not adjust in the short-run, but are flexible in the long-run. a. Show how an expansion of the domestic money supply of 2 % affects interest rates and the exchange rate in the short-run. Assume that uncovered interest rate parity holds. Use diagrams and explain the process. b. What is the impact in the long-run? Contrast this with the short-run. c. (Spillover) Now show how an expansion of the foreign money supply of 2 % affects domestic interest rates and the exchange rate in the short-run. Assume that uncovered interest rate parity holds. Use diagrams and explain the process. d. What is the impact in the long-run on the domestic economy of a rise in foreign money supply? Contrast with the short-run in (c). e. What happens if both countries expand money supply by 2 %