IS curve:
\(Y = C(Y - T, i - \pi^e) + I(i - \pi^e, Y_{- 1}) + \bar G + X(\rho, Y, Y^*)\)
Here, when foreign income increases, net exports increase and AD increases. Then p decreases and real depreciation occurs, the trade balance will improve as exports increase and AD increases. Domestic income increases, imports increase, and net exports goes back again. 
LM curve:
\(\frac{M}{P} = L(i, Y)\)
Real and nominal exchange rates: