Problem 2. Consider the small open-economy Mundell-Fleming model under floating ex- change rate. How will equilibrium income, nominal exchange rate, consumption, net exports, and money supply change when: import quotas (quantitative restrictions on imports) are removed? . there's an increase in taxes? . there's a decrease in money supply? the government implements an investment subsidy? for some reason the country's clothing exports have become more popular than before? For each case, distinguish between a floating exchange rate regime and a fixed exchange rate regime. A. For each case, write "increase", "decrease", or "no change for each variable. (Note: use our notation for the nominal and real exchange rates.) 2 B. For each case, draw a graph that shows the change in equilibrium income and nominal exchange rate. C. For each case, explain succinctly the mechanisms behind the variables' movements