Suppose that a central bank (CB) implements a flexible exchange rate regime. The main aim of the CB is to keep the inflation rate stable (r = 0). It does not target any level of inflation. Assume that initially, both net exports and the government budget are balanced (NX = 0 and T - G = 0). The output is at its natural level and the trade balance level (Y = Y*), and the domestic interest rate equals the foreign interest rate (i = i*). Suppose that before the election, the government decides to cut taxes. How would this policy change the exchange rate (E), output (Y), interest rate (i), net exports (NX), and the budget (B)? By the given conditions and equations above, analyze this scenario, explain with your own sentences, and describe the process with the IS-LM-PC-IP model. Please use the diagrams below.