For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock.

Question:

For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock. For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, and TB. Assume the government allows the to float and makes no policy response.
See the following figures.
a. Foreign output decreases.
b. Investors expect a depreciation of the Home currency.
c. The money supply increases.
d. Government spending increases.
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...