Suppose that the price level relevant for money demand includes the price of imported goods and that the price of imported goods depends on the exchange rate. That is, the money market is described by M/P=L(r, Y), where P=\lambda P_{d}+(1-\lambda) P_{f} / eP=λP d +(1−λ)P f /e. Here, P_{d}P d is the price of domestic goods, P_{f}P f is the price of foreign goods measured in the foreign currency, and e is the exchange rate. Thus, P_{f} / eP f /e is the price of foreign goods measured in the domestic currency. The parameter \lambdaλ is the share of domestic goods in the price index P. Assume that the price of domestic goods P_{d}P d and the price of foreign goods measured in foreign currency P are sticky in the short run. a. Suppose we graph the L M^{*}LM∗ curve for given values of P_{d}P d and P_{f} P f (instead of the usual P). Is this L M^{*}LM ∗ curve still vertical? Explain. b. What is the effect of expansionary fiscal policy under floating exchange rates in this model? Explain. Contrast with the standard Mundell-Fleming model. c. Suppose political instability increases the country risk premium and, thereby, the interest rate. What are the effects on the exchange rate, the price level, and aggregate income in this model? Contrast with the standard Mundell-Fleming model.