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Question 4 a) Consider an economy described by the following-equation-. Y = C+I+G+ NX Y = 5,000; G = 1,000; T = 1,000; C = 250-+ 0.75(Y-T) I = 1000 -50r NX = 500 - 500E r=r - 5 . i. in this economy, solve for national saving , investment, the trade balance, and the equilibrium exchange rate ii. Suppose now that G rises to 1,250, Solve for national saving, investment, the trade balance, and the equilibrium exchange rate. Explain your results ili. Suppose now that the world interest rate rises from 5 to 10%; (G is again 1,000). Solve for national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you find. (6.5 marks) b) Consider how unemployment would affect the Solow growth model Suppose that output is produced according the production function Y - K"[(1-u)Nji-, where K is capital, N is the labor force, and u is the unemployment rate. The national saving rate is s, the labor force grows at rate gn. and capital depreciates at rate a. i. What is the per worker production function? How does it depend on the unemployment rate? ii. Calculate the steady-state level of capital per worker How does an increase in the unemployment rate affect this value