3. Using the IS/LM/BP model and assuming perfect capital mobility, explain:

a. how a decrease in foreign income affects domestic output.

b. how an appreciation of the domestic currency affects domestic output.

I NEED TO SEE THE GRAPHS! Please tell me if my illustrations are correct

curve also will shift to the left : The BY curve represent jog of equilibrium in the foreign exchange market so when exports decrease , the demand for the domestic country's currency decreases , causing the curve to shift . and the decrease in demand for the domestic currency will lower domestic interest rate which in turn causes a decrease in inflow of foreign reserves thus causes a contraction in money supply thus causes LM curve to shift to the left therefore 0 - decreasing output . wow " a Effects On the domestic country can be seen under fixed and flexible exchange rate using the Is / LM / BP model - UNDER FIXED EXCHANGE RATE Lma, LM, When capital is perfectly Interests mobile , the BP curve is rate LOST horizontal at the foreign interest rate / does WHY on not shift . plant jeval song your Jon IS , 152 > y Output 41 Yo2091 UNDER FLEXIBLE, EXCHANGE RATE i when capital is perfectly mobile , the BP curve does Interest not Shift . Change in rates foreign income affects net exports and therefore an the 15 curve Co Bpix woweng asivise bap aesop Lotor sitt of 219 3 910 IS IS2 74 Y, Yo Output darko 36 . Assumming perfect capital mobility, an appreciation of the casoous be domestic currency will decrease domestic output . b An appreciation of currency occurs / means a RISE in the value 210100 of a currency in a floating exchange rate. This will then make 199 som foreign products a cheaper " . thus increasing imports BUT on the too 'other hand reduce exports because demand for domestic products umnoRoss Will reduce Since they will be considered more expensive than foreign products . blog -ness. Higher demand for imports and lower demand for exports will reduce net exports , leading to lower domestic output due to ' reduced aggregate demand Lm , Job -up Jimor Interest rates devorah oldonesb - BP Diamoos hey arnold ap soll womb shop IS , AZU Y output, 17