and explain two reasons why the consumption function would react in this way. b) (30 points total, 10 points for each correct and completely labeled diagram). On the exam sheet draw three diagrams (all pertaining to the US): on the top left, draw the Keynesian cross diagram, on the bottom left, draw an IS - LM diagram, and on bottom right, draw the FX market. Locate the initial point as point A and then show how each diagram is affected by the shock and label as point B, again, assuming flexible exchange rates. T v .. T T T . rl L] a