5. Consider Gotham's economy= assuming sticky prices in the short run: C = 2 + 0.8(Y I) I= 1.25 2i REX: 1.15 3/}: (1051' f=i*+(1/EI) M= 0.25Y 51' Government spending and taxes are given as G = T = 2.5 , the money supply M = 1.5, and the world interest rate is 1"\" = 0.05. a. Find the equations that describe the IS and the LM. Compute the short-run equilibrium of Gotham's economy (output. interest rate. exchange rate). From the FX equation and the solution for E, What is the implied expectation about the currency (appreciationfdepreciation)? b. Batman helps nance a 20% increase in public spending to ght the Joker (with no corresponding increase in taxes). Calculate the impact on Gotham's economy in terms of its output. interest rate and exchange rate. Illustrate this scenario using the IS-LMFX diagrams. c. Return to the original situation in (a). Suppose the world interest rate increases to 0.06. Compute the impact this has on the economy. To restore the exchange rate to its original level, what must Gotham's central bank do in terms of monetary policy? Provide numericai answers. Iliustrate this situation on diagrams)