Consider the response of current account to exchange rate changes studied in class.In class, we showed that the response of the current account depends on the relativestrength of the price (price of exports and price of imports) and volume (volume ofexports and volume of imports) e/ects.I assumed in class that the volume e/ectsdominate.We derived the AA-DD model under that assumption.In this exerciseyou are asked to re-derive AA-DD model under an alternative assumption that thevolume e/ect is weaker than the price e/ect.Please discuss how the AA and DDcurves will change (if at all) under this alternative assumption. Plot your ndings onthe "new" AA-DD diagram