Question 8 Use the money market and FX diagrams to answer the following questions. You may include graphs in your answer if you'd like, but be sure to explain them adequately. Consider the relationship between the euro and the dollar. 1. Suppose the US. Federal Reserve decides to temporarily increase the money supply. How does this change affect the equilibrium in the US. money market and the foreign exchange market, in both the short run and the long run? Consider the implications for 23, E$/, and the US. price level PUS. 2. Suppose the US Federal Reserve decides to permanently increase the money supply. How does this change affect the equilibrium in the US. money market and the foreign exchange market, in both the short run and the long run? Consider the implications for i3, E$/, and the US. price level PUS. 3. Suppose the US. Federal Reserve annouces that it will permanently increase the money supply, but then decides not to do it after all. How does this change affect the equilibrium in the US. money market and the foreign exchange market, in both the short run and the long run? Consider the implications for 733, Ewe, and the US. price level PUS