Can you help with this question:

If the price levels in the ABC Islands, a US trading partner, increases which signals inflation in the islands.

1. What is the impact on the the US economy using an AS/AD analysis?

1. 2 If the Federal Reserve wants to repair the effects on the Us economy from the above, identify a policy action it might undertake.

1. 3 Explain the impact of the Fed's move on each of the following:

Output

Price level

international value of the US dollar

I am thinking the Fed would utilize a contractionary monetary policy, is this correct?