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's 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.

Briefly Explain the results.