Question 1

Y = 5,000

C= 250 + 0.75(Y - T)

I = 1,000 - 50r

T = 1,000

G = 1,000

NX =500-500.

r*=5

a. Find national saving, investment, net exports, and nominal exchange rate.

b. Government spending increases by 250. Find national saving, investment, net exports, and nominal exchange rate.

c. Return to the original level of government spending, but increase the world interest rate to 10. Find national saving, investment, net exports, and nominal exchange rate.

Please show work.