1A. Suppose in the short-run, the current account CA(Y-T. E P /P) = 500 (E P*/P) - (E P./P) (100 + Y-T - 80(E P-/P). Suppose Y-T = 1060 and E P*/P = 2, The current account = 1B. Now suppose in the short run, with prices given, the exchange rate increases by 5%. Compute the elasticity given below (you need to compute the new current account figure, along with the percent change Elasticity = Did the current account improve with an increase in the exchange rate? HINT: The elasticity of the change in the current account with a change in the real exchange rate q = EP./P is ACA ACA q %Aq aq CA Show your work and explain your