Question 2 A) Consider a small open economy, which is at the long-run equilibrium unless a question indicates otherwise. The small open economy is described by the following equations: C\" = 20+ 0.70\" -73 130: r" = 30 nor NX =400.lY6e M'U'P =15 + 0.5Y 3000 +1r\") where Y is output, T is a lump sum tax, G is government spending, 1" is the real rate of interest, at" is expected inflation, e is the real exchange rate, and P is the price level. Derive an algebraic expression for the IS and LM curves with the real interest rate, r, on the lefthand side of the equation. Find also the AD Curve, with real output, Y, on the lefthand side. 3) Assume real money supply, MIP, is 50, the price level of the rest of the world, Pw, is 2, the world real interest rate, r\D) Using the open economy lSLMFE framework, show graphically and explain the initial equilibrium, the short-run equilibrium, and the return to the long run equilibrium. What is the value of real output, Y, real exchange rate, 6, and real money supply, MIP in the long run? What is the inflation rate between the initial equilibrium and the long run equilibrium? E) Explain and show graphically what would have happened after a monetary expansion if instead the country had a fixed exchange rate regime. [No calculations needed]. F) Now suppose the government of this economy has fixed the nominal exchange rate, em\