1. Consider a small open economy with a floating exchange rate described by the following equations:

Y= 400 + 5G- 4T+ 5NX- 200r(IS curve)

Y= 250r- 100 + 2(M/P)(LM curve)

NX= 240 - 120ewhereeis the exchangerate

r* = 4.0 per cent(international interest rate)

The price level (P) is fixed at 3.0,M= 300,G= 280 andT=200.

a.Determine the equilibrium level ofYin the small open economy.Y=

b.What is the equilibrium value ofNX?NX=

c.What is the equilibrium exchange rate,e?e=?

d.If the level of national saving is 260, what is the level of domestic investment?I=

Show answers as integers except where indicated.