Question: Do not only give the solutions, but also clearly explain your derivations.I need help please Exercise 3 Consider an economy described by the circular flow

Do not only give the solutions, but also clearly explain your derivations.I need help please

Do not only give the solutions, but also clearly explain your derivations.I

Exercise 3 Consider an economy described by the circular flow model for a small open economy: Y Y C = C+c(Y -T) I = I-br NX = NX - d-E G G T T Y is aggregate production, C is private consumption, / is planned private investment, G is government purchases, T is taxes, and NX is net exports. r is the domestic real interest rate, r* is the foreign real interest rate, and & is the real exchange rate. C, I and /V X are autonomous consumption, autonomous investment and autonomous net exports, respectively. c, b and d are parameters, with 0 0 and d > 0. Y, C, I, NX, G, T, c, b, d and r* are exogenous. Assume for all your computations that the goods market is in equilibrium. Assume the following functional forms and parameter values: Y = 300, G =60, T=40, r* = 5 C = 20+ 4(Y -T) I = 100 - 10r NX = 140- 10 Compute now the equilibrium values of the following variables: 1. private saving Spr 2. public saving Spub. 3. total saving S. 4. planned private investment I. 5. the real interest rate r

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