3) Ghana and the gold standard Ghana is one of the world's largest gold exporters, though they have other major exports like cocoa. Let's say Ghana fixes the cedi (their currency) to the price of gold, first as a Peg the Export Price policy. Now there is a major gold discovery in Ghana which results in a flood of gold exports that gluts the gold market and causes the price of gold to fall on world markets. a) What happens to the money supply in Ghana as a direct result of these gold exports? b) Assume the increase in income in Ghana that results from the cumulative effect of the additional gold exports is X cedis (including any multiplier effects). If consumers spend half of their income on imports, how much do imports rise by? C) What is the net effect on the trade deficit? d) If the price of gold falls on world markets due to this glut, what must happen to the value of the cedi (depreciate, appreciate, etc.)? e) What would the net effect of this change be on the trade surplus (in cedis)? f) Assume that Ghana has an inflationary gap as gold production raises GDP above potential GDP. Let's say that, instead, Ghana goes on a gold standard, where gold can be deposited in banks at a fixed rate for cedis. Ghana experiences the same surge in gold mining as before. g) What happens to the money supply in Ghana now since they are on a gold standard? h) What would happen to interest rates as a result? Ghana is a small open economy, and assume they do not have capital controls. i) What will happen to capital flows and the Ghanaian capital account as a result of this change in interest rates? Assume that, since Ghana is on a gold standard, that capital flows take the form of gold leaving Ghana. j) What happens to the money supply in Ghana as a result of these gold flows (through the capital account)?) k) What happens to interest rates as a result of this change in the money supply from capital flows