This question explores IS and FX equilibria in a numerical example.

a$.$ The consumption function is $.$ What is the marginal propensity to

consume? What is the marginal propensity to save?

b$.$ The trade balance is $.$ What is the marginal propensity to

consume foreign goods? What is the marginal propensity to consume home goods?

c$.$ The investment function is $.$ What is investment when the interest rate i is

equal to $?$

d$.$ Assume government spending is G$.$ Add up the four components of demand and write

down the expression for D$.$

e$.$ Assume forex market equilibrium is given by $,$ where the two foreign

return terms on the right are expected depreciation and the foreign interest rate. What is

the foreign interest rate? What is the expected future exchange rate?