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Suppose you run the central bank in an open economy. What happens to the following variables...

Suppose you run the central bank in an open economy. What happens to the following variables of interest in response to the below events (analyze each event separately)? The president restricts the import of Chinese goods Use the standard open economy IS-LM model (not the Fleming-Mundell model). Also, assume direct effects of shifts are larger than indirect effects. a) IS – Direct Effect (increase / decrease / indeterminate / no change)? b) IS – Exchange Rate Effect (increase / decrease / indeterminate / no change)? c) LM (increase / decrease / indeterminate / no change)? d) Interest rate (increase / decrease / indeterminate / no change)? e) Exchange rate (increase / decrease / indeterminate / no change)? g) Output (increase / decrease / indeterminate / no change)? l) If the goal of the Central Bank is to stabilize income, the bank should change the money supply in which way (increase / decrease / no change)?

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