Show and analyze the effects of a decline in exports on: - Domestic Economy (income and interest rate); - Balance of Payments and - Exchange Rate within the Mundell-Fleming Model under: a) - Fixed Exchange Rate Regime and for the Imperfect and Perfect Capital Mobility situations. b) - Flexible Exchange Rate Regime and for the Imperfect and Perfect Capital Mobility situations. While answering this question: - Draw diagrams for different exchange rate regimes and capital mobility situations. - Assume that interest elasticity of international capital is higher than interest elasticity of domestic money demand. -Diagrams should be clear and understandable; shifting parameters should be specified for each case. - Compare the results and write your brief comments on them. - Focus on the effect on income. Is this effect larger under fixed or flexible exchange rates? Why?