Suppose that a central bank buys bonds on the open market and uses money to pay for them, thereby increasing the supply of money and decreasing the supply of bonds. Use the portfolio-balance approach...

Suppose that a central bank buys bonds on the open market and uses money to pay for them, thereby increasing the supply of money and decreasing the supply of bonds. Use the portfolio-balance approach to explain what would happen to (i) domestic interest rate, (ii) demand for foreign bonds, (iii) foreign interest rate, and (iv) the spot exchange rate.