Intermediate Macroeconomics

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2. The following equations describe a small open economy: Y = C+I+G+ NX Y = 8500 G = 2500 T = 2500 C =500 + 2/3(Y - T) I =900 -50r NX = 1,500 - 250& r= r = 8. a. For this economy calculate national saving, investment, the trade balance, and the equilibrium exchange rate. b. Suppose the government institutes protectionist policies in order to raise net exports. NX = 2000-250& becomes the new net export function. Recalculate NX and & under these new conditions. Does the policy accomplish its intended goal? Explain (15 pts.)