Consider a world with only two countries, which are designated the home country \((\mathrm{H})\) and the foreign country (F). Output equals its full-employment level in each country. You are given the following information about each country:

a. Write national saving in the home country and in the foreign country as functions of the world real interest rate \(r^{w}\).

b. What is the equilibrium value of the world real interest rate?

c. What are the equilibrium values of consumption, national saving, investment, the current account balance, and absorption in each country?

Home Country Consumption: Investment: CH 100+ 0.5Y - 500 IH 300 500 Government Purchases: GH = 155 Full-employment Output: YH = 1000 Foreign Country - Consumption: Investment: Government Purchases: CF = 225 + 0.7YF - 600r IF 250 200r GF = 190 Full-employment Output: YE 1200