Consider a world with two countries, the U.S. and Europe, and take the perspective of the U.S. econ- omy. Assume a oating exchange rate. For each scenario below, use the openeconomy ISLM model (What the book calls the ISLMFX model) to predict the shortrun response (increase, decrease, no change, or uncertain) of U.S. output Y, interest rate z'$, the exchange rate Ewe, consumption C, investment I, and net exports N X . Assume that the U.S. Federal reserve does not adjust the money supply in response to any of these scenarios. Please explain your answers briey.You may, but are not required to, include diagrams as part of your explanation. 1. An increase in European output 1\"\". 2. A decrease in the expected dollar-euro exchange rate Ege. 3. An increase in the European money supply M. 4. A decrease in U.S. government spending G. Consider the same setup and scenarios as in Question 1, but now assume that the U.S. Federal Reserve adjusts the money supply in response to these scenarios in order to maintain a xed exchange rate Egg. Consider the same setup and scenarios as in Question 1, but now assume that the U.S. Federal Reserve adjusts the money supply in response to these scenarios in order to maintain xed U.S. output Y. Assume oating exchange rates