For this question, use the Mundell-Fleming model with flexible exchange rates. Eastland's main trading partner is Westland. Suppose Westland undertakes a contractionary monetary policy. What is the effect of Westland's contractionary monetary policy on Eastland's real exchange rate in the short run, assuming no change in Eastland's policies and Eastland has a floating exchange rate?

(Draw a graph each for Westland and Eastland and show what changes and use the results and the currency market to determine what happens to exchange rates and net exports) If Eastland has a fixed exchange rate, what should the central bank of Eastland do to keep exchange rates constant?