Exercise 5.8: Consider a parameter figuration such that a small open economy is currently running a trade balanceidie. Many governments have in the past implementedapital controls, for example, a legal restriction that prevent for- eignagents from purchasing domestancial assets. Presumably, the idea here is that a trade balance dleit is a 'bad thing,' and that the capital controls will serve to prevent an excessivefidie from occurring. Use the theory developed here to show that while capital controls can successfully reduce (or eliminate) a trade deicit, this is likely to come at the expense of lower economic welfare for domestic agents