For each of the following situations, use the is-lm-fx model to illustrate the effects of the shock and the policy response 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. note: in this question (unlike in the work it out question) assume that the government allows the exchange rate to float but also responds by using monetary policy to stabilize output. 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. hint: in each case, make use of the goods market equilib- rium condition to understand what bappens to consump ion, investment, and the trade balance in the shift from the old to the new eqilibrium. repeat the previous question, assuming the central bank responds in order to maintain a fixed exchange rate. in which case or cases will the government response be the same as in the previous question:

Sean lives in dallas and runs a business that sells boats. in an average year, he receives $722,000 from selling boats. of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. he owns his showroom; if he chooses to rent it out, he will receive $2,000 in rent per year. assume that the value of this showroom does not depreciate over the year. also, if sean does not operate this boat business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $2,000 per year rate. no other costs are incurred in running this boat business.identify each of sean's costs in the following table as either an implicit cost or an explicit cost of selling boats.implicit costexplicit costthe wages and utility bills that sean pays the rental income sean could receive if he chose to rent out his showroom the salary sean could earn if he worked as a paralegal the wholesale cost for the boats that sean pays the