Short-term effects: the US money supply increases, the real money supply moves down, the US money market is balanced at point 2, the US interest rate drops from R 1s to R2s, the US dollar depreciates, the US dollar income in the foreign exchange market moves to the left, the euro appreciates, the expected euro income moves to the right, and the foreign exchange market is balanced at point 2'. Long-term impact: the money supply in the United States has increased, inflation has intensified, and prices have risen. As the price level rises in proportion to the money supply, the real money supply moves up to the original level, the US money market is balanced at point 4, the US dollar interest rate rises from R2s to R 1s, the foreign exchange market, the US dollar appreciates, the US dollar income increases and moves back to the original level to the right, the euro depreciates, the expected return of the euro decreases, and the foreign exchange market is balanced at point 4'.