TOPIC: The Mundell-Fleming Model, The Economy in the Short Run

Question: Imagine that you run the central bank in a small open economy. Your goal is to stabilize income, and you adjust the money supply accordingly. Under your policy, what happens to the money supply, the interest rest, the exchange rate, and the trade balance in in response to the following shock? Draw IS-LM / IS*-LM* graphs to support your arguments please.

Shock: The President restricts the importation of Japanese/Foreign cars.