Country X is a small-open economy with free capital outflows and purely floating exchange rates.

This country engages in a serious international trade dispute with all its major trade partners. As a result, all these countries retaliate and impose hefty tariffs on all Country X's exports.

Global financial markets react badly to this tariff news, with foreign investors dumping Country X bonds (as they perceived they are riskier now).

Using the Mundell-Fleming model to show in a graph how the mentioned news will affect output and the exchange rate in Country X

Very briefly explain the graph.

(Things to consider: perception of the risk increased, tariff was imposed on Country's X exports -> NX decreased)