2. FLOATING ERR \& PCM: use the Mundell-Fleming Model to analyze the impact of a FALL in consumer/investor confidence (thus affecting demand). a. Provide an intuitive discussion of the effect of the shock (FALL in confidence) on the domestic economy. As part of your answer discuss the impact on demand, exports, imports, CA, C, output, the interest parity condition, the exchange rate (discuss the mechanism that leads to the change in E), capital flows. Discuss. Provide economic intuition along with your discussion. b. Now use the YY-LL diagram to show the impact of the shock. Very Briefly state the reason for any shift(s) in curves that are in your figure. upload diagram c. What is the FINAL IMPACT on Y, E, i, C, Exports, Imports, CA, capital flows, Ms,Ms/P, and L(i,Y) ? Just STATE the directional change (up or down) in each variable relative to the original level. DO NOT DISCUSS. 2. FLOATING ERR \& PCM: use the Mundell-Fleming Model to analyze the impact of a FALL in consumer/investor confidence (thus affecting demand). a. Provide an intuitive discussion of the effect of the shock (FALL in confidence) on the domestic economy. As part of your answer discuss the impact on demand, exports, imports, CA, C, output, the interest parity condition, the exchange rate (discuss the mechanism that leads to the change in E), capital flows. Discuss. Provide economic intuition along with your discussion. b. Now use the YY-LL diagram to show the impact of the shock. Very Briefly state the reason for any shift(s) in curves that are in your figure. upload diagram c. What is the FINAL IMPACT on Y, E, i, C, Exports, Imports, CA, capital flows, Ms,Ms/P, and L(i,Y) ? Just STATE the directional change (up or down) in each variable relative to the original level. DO NOT DISCUSS