For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response. (Note: Assume the government responds by using monetary policy to stabilize...

Extracted text: For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response. (Note: Assume the government responds by using monetary policy to stabilize output.) For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, TB. Assume the government allows the exchange rate to float and makes no policy response a. Foreign Output Increases b. Investors expect an appreciation of the home currency in the future c. The home money supply decreases d. Government spending at home decreases