DSE 2021 Question 34: Open-economy macroeconomics

Consider a small open economy where domestic and foreign prices are normalised, with $M = L(i,Y)$, $Y = A(i,Y) + G + X(Y,E)$, and $B = 0 = KI(i - i^*) + X(Y,E)$ (notation: $M$ money supply, $L$ money demand, $i$ domestic interest rate, $i^*$ foreign interest rate, $Y$ output, $A$ absorption, $G$ government spending, $X$ net exports, $E$ exchange rate, $KI$ net capital inflows). Assume domestic and foreign assets are perfect substitutes, there is no arbitrage in equilibrium, the regime is flexible exchange rates, and the Marshall-Lerner condition holds. What will be the impact of an increase in government spending on imported goods?