Based on the following information, what is the balance on the Current Account and the Financial Account?

Exports of goods and services = $8 billion

Imports of goods and services = $6 billion

Net income on investments = -$1 billion

Net transfers = -$2 billion

Increase in foreign holdings of assets in the United States = $7 billion

Increase in US holdings of assets in foreign countries = -$6 billion

1. Suppose that the US government deficit causes interest rates in the United States to rise relative to those in the European Union.

1. Assuming all else remains constant, explain how this would impact the supply and demand for US dollars.

1. Show this change on the graph below using the market for foreign exchange.