Using the Mundell-Fleming model, predict what would happen to aggregate income, the exchange rate, and the trade balance under both floating and fixed exchange rates in response to each of the following shock:

a) A decrease in consumer confidence about the future induces consumers to spend less and save more.

b) The introduction of a more efficient line of Ford makes some consumers prefer domestic cars over foreign cars.

so 2 for each, fixed and floating for a) and b)