d)Use the IS-LM-FX graph, and illustrate in words how this change in taxes affects the economy. Label the initial equilibrium in the goods and money market, A, and initial equilibrium in the foreign exchange market, A/; equilibrium in the goods and money market, after the change in tax level, B, and equilibrium in the foreign exchange market, after the event occurs, B/. Provide appropriate economic intuition behind the direction of changes in home economys output, consumption, investment, trade balance, and exchange rate.

Goods Market Money Market FOREX C = 1000.8{Y-7) 1=900-3,000 G = 500; T = 300 TB = 400/1-4/E) -0.20Y-200) I=0 M = 4000 L=05Y - 3,000 Pa 10 Goods Market Money Market FOREX C = 1000.8{Y-7) 1=900-3,000 G = 500; T = 300 TB = 400/1-4/E) -0.20Y-200) I=0 M = 4000 L=05Y - 3,000 Pa 10