2) Consider the following demand and the supply curves of foreign currency, where ExR represents the local currency to foreign currency (e.g. USD GBP) exchange rate. FC represents the units of foreign currency reserves held in the "local" economy. D : ExR = 3 - 0.075FC , S : ExR - 0.5 + 0.025FC Report the exchange rate and foreign currency reserves amount, which you can identify by setting supply equal to demand. 3) Consider a case in which the foreign interest rate, it, rises such that demand sees a 0.8 level-shift increase and the new demand curve can be represented by D' = D+0.8. What are the new exchange rate and currency reserve values? 4) How would you describe the change in both currencies? Which has depreciated and which has appreciated? 5) What is the percentage change in currency reserves