Assume the economy has flexible exchange rates and perfect capital mobility. Use the IS-LM-UIP diagram to show the changes in output, the interest rate, the nominal exchange rate, and the trade balance, for each of the following:
i. A nominal depreciation of the exchange rate. 4
ii. A nominal appreciation of the exchange rate.
iii. An increase in the interest rate.
iv. A decrease in the interest rate.
v. An increase in government spending.
vi. A decrease in investment for any given interest rate.