For each of the following situations, use the IS-LM-FX model we learned in class to graphically illustrate the effects of the shock. State the effect of the shock on the following variables: Y, i, E, C, I, TB for each case below. Assume that the government lets the exchange rate float.
a. The money supply increases.
b. Government spending increases.
c. Foreign income decreases.
d. Investors expect a depreciation of the home currency.