Question 4: Consider the following linear version of the DD model in the text: Consumption is given by C = (1 - s)Y and the current account balance is given by CA = aE - mY, where s and m are numbers below 1. (In macroeconomics textbooks, s is sometimes referred to as the marginal propensity to save and m is called the marginal propensity to import.) Then the condition of equilibrium in the goods market is Y = C + I + G + CA = (1 - s)Y + I + G + aE - mY. a. Solve for the equilibrium output Y, as a function of I (investment), G (government spending), E(the exchange rate) and the parameters s,a, and m. Discuss how an increase in G affects output all else equal (with prices fixed) . b. Describe why exchange rates matter for exports and imports and as a result if the increase in G will have a smaller or bigger effect than the one you described in a.