1. Assume a small open economy where: Y=3K0.6L0.4;C=200+0.8(YT);I=50010Rw; NX=10050;K=400;L=400;T=150;G=250;Rw=4. a) Evaluate the government budget. b) Find the value of national, private, and public saving. d) Compute the trade balance (often used as proxy for current account balance). e) Suppose that congress decides to adjust government purchases in order to achieve a balanced budget. Compute the implications of such policy on long run equilibrium real exchange rate, saving, investment, and trade balance. f) Plot your results from part c) and e) in a single graph and provide an economic interpretation for the expected transition. 1. Assume a small open economy where: Y=3K0.6L0.4;C=200+0.8(YT);I=50010Rw; NX=10050;K=400;L=400;T=150;G=250;Rw=4. a) Evaluate the government budget. b) Find the value of national, private, and public saving. d) Compute the trade balance (often used as proxy for current account balance). e) Suppose that congress decides to adjust government purchases in order to achieve a balanced budget. Compute the implications of such policy on long run equilibrium real exchange rate, saving, investment, and trade balance. f) Plot your results from part c) and e) in a single graph and provide an economic interpretation for the expected transition