8. Suppose China exports TVs and uses the yuan as its currency, whereas Russia exports vodka and uses the ruble. China has a stable money supply and slow, steady technological progress in TV production, while Russia has very rapid growth in the money supply and no technological prog- ress in vodka production. On the basis of this information, what would you predict for the real exchange rate (measured as bottles of vodka per TV) and the nominal exchange rate (measured as rubles per yuan)? Explain your reasoning. (Hinr: For the real exchange rate, think about the link between scarcity and relative prices.) 9. Oceania is a small open economy. Suppose that a large number of foreign countries begin to subsidize investment by instituting an investment tax credit (while adjusting other taxes to hold their tax revenue constant), but Oceania does not institute such an investment subsidy. a. What happens to world investment demand as a function of the world interest rate? b. What happens to the world interest rate? c. What happens to investment in Oceania? d. What happens to Oceania's trade balance? e. What happens to Oceania's real exchange rate?2. () LounchPod . Consider an economy described by the following equations: Y= C+I+G+NX, Y = 8,000, G = 2,500, T = 2,000. C = 500 + 2/3 (Y - T), 1 = 900 - 50r NX = 1,500 - 250E,a. In this economy, solve for private saving, pub- lic saving, national saving, investment, the trade balance, and the equilibrium exchange rate. b. Suppose now that G is cut to 2,000. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilib rium exchange rate. Explain what you find. c. Now suppose that the world interest rate falls from 8 to 3 percent. (G is again 2,500.) Solve for private saving, public saving, national saving, investment, the trade balance, and the equilib rium exchange rate. Explain what you find