• Please show what happens on the AADD model with the XX curve if there is a temporary tax increase. Describe what happens to E, Y, and the CA.briefly describe what would look different if the tax increase were permanent.

• Please show what would happen on the AA DD diagram if there was a sudden belief that the home currency will be more appreciated in the future, and describe what action you would take if you were in charge of the central bank and you wanted to keep the exchange rate from changing.