C = 15 +0.6Y, = 50 - 500i, X = -90 + 100E, Q = 85 -50E and NX = X - EQ. There is no government sector in this model: G = T =0. Domestic and foreign price levels are equal, so the nominal and real exchange rates are also equal. (a) Derive the equation of the IS curve. (3 points) If we plot output (Y) on horizontal axis and nominal interest rate (i) on vertical axis, what is the slope of the IS curve? (2 points) What is the vertical intercept of the IS curve? (2 points) (b) If the nominal interest rate (i) is 5% and the nominal exchange rate (E) is 1.2, find equilibrium level of output (Y) and net exports (NX). (4 points) (c) If the nominal interest rate (i) remains at 5% and the nominal exchange rate (E) depreciates to 1.3, find the new equilibrium level of output (Y) and net exports (NX). (2 points) Let AN X denote the change in net exports and AY the change in output. Briefly explain how ANX and AY are related. (2 points) (d) What is the derivative of NX with respect to E, ONA? (3 points) Evaluate this derivative when E = 1.2 and when E = 1.3. (2 points) (e) Briefly explain your answers to parts (c) and (d) above by relating them to the Marshall-Lerner condition. (2 points)