For purposes of this exercise, assume a flexible exchange rate. For each of the following exogeneous shocks, use an IS-LM-FX model to illustrate the short-run effects of each shock. Please be sure to label ALL the axes, curves, and equilibrium values. For each case, state the effect of the shock on the following variables [increase (+), decrease (-), no change (NC), or ambiguous (?)]: real output (Y), nominal interest rate (i), exchange rate (E), consumption (C), investment (I), and the trade balance (TB) by completing the table below.

a.Foreign output decreases.

b.Home money supply increases.

c.Home government spending increases.