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:

answer; read and consider the content of the items;

answer; windows embedded;

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.