SECTION - ANALYTICAL QUESTION (1 page + graphs Q.2 Consider the model of output and exchange rate determi Suppose the economy begins at a short run equilibrium equal Yo. determination (tive AA-DD-XX model, we have studied in class brium point where exchange rate is at a level and Output emporary increase in government expenditure under o floating er a fixed exchange rate regime. Be sure to discuss the effe learly explain and show the effects on two different Compare and contrast the short-run effects of a temporary exchange rate regime to the effects under a fixed exch output, the home current account, and the nominal excha Use AA-DD-XX diagrams to support your answers. (Clearly explain an the graphs, one for flexible rates and the other for fixed rates.) (14) - Hirithtachafe rall DIA Man tre as decrease in an ADT SECTION - ANALYTICAL QUESTION (1 page + graphs) (14) 0.2 consider the model of output and exchange rate determination (the AA OD XX model) we have studied in class suppose the economy begins at a short run equilibrium point where exchange rate is at a level Eo and Output equal Yo AD compare and contrast the short-Pun effects of a temporary increase in government expenditure under a floating exchange rate regime to the effects under a fixed exchange rate regime. Be sure to fully discuss the mechanism and channels by which we arrive of the effects on home output. The home current account, and the nominal exchange rate Use AA-DD-XX diagrams to support your answers, (Clearly explain and show the effects on two different Eraphs, one for flexible rates and the other for fixed rates.) that follow