Given an open economy described by:

C = 10 + 0.5(Y-T)

I = 3 + 0.3Y

G= 10

IM/e = 0.2Y

X = 0.3Y*/e

e is real exchange rate, Y* foreign output

Government budget deficit is 2% of domestic output/income

denoted by Y.

Question 1) what is the budget constraint of the G for the

domestic economy?

Question 2) Given the domestic economy from 1, what is the

domestic demand for domestic goods equation for domestic schedule goods (AA)

and the aggregate demand for domestic goods schedule (ZZ)?