Consider the Kenyan economy with a Kenya Shilling (KSH) as the domestic currency. Using well-labelled diagrams, of demand and supply of foreign currency, describe the effect of following events on the KSH and Balance of Payment of the Kenya's economy. (Use a different diagram for each event)

Reduction of income tax rate from 30% to 25% which causes the average income to raise in Kenya relative to average income in Rwanda, ceteris paribus.(3 Marks)

Due to COVID-19 pandemic, Kenyans expect a high exchange rate against the US dollar, ceteris paribus.(3 Marks)