Assume in an open economy consumption is given by, and investments by. The government spending is, and taxation is of an amount. The exports are, and imports are. The real exchange rate is 1.5.

a) Write the equilibrium condition in the goods’ market. 

b) What is the fiscal policy multiplier? If the economy was not open to international trade, what would the multiplier be? Do they have the same value? If not, explain why they differ. 

c) If the interest rate is 10 and the foreign income is 110, what is the equilibrium level of national income? 

d) If the other country implemented an expansive fiscal policy that increased its income by 30, what would be the effect on national income?