Consider theories relating to exchange rate determination in the Long Run. The domestic central bank responds to the COVID 19 virus by increasing money supply via quantitative easing measures.

(a)Applying the Dornbusch's sticky price model and assuming the exchange rate is not managed directly by the central bank, explain the implications of the central bank actions on the spot exchange rate (e)

(i)in the short run

(ii)in the long run

(b)Applying the monetary model, explain the implications of the central bank action on the spot exchange rate

(c)What are the key differences in the monetary and Dornbusch models of exchange rate determination?