The mundell-fleming model takes the world interest rate r* as an exogenous variable. Let's consider what happens when this variable changes
a) what might cause the world interest rate to rise?
b)in the mundell-fleming model with a floating exchanges rate, what happens to aggregate income the exchange rate, and the trade balance when the world interest rate rises?
c)in the mundell-Fleming model with a fixed exchange rate, what happes to aggregate income, the exchange rate, and the trade balance when the world interest rate rises?