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Please show your answer clearly, thanks. Consider the following world that consists of two economies: Home Economy and Foreign Economy. Foreign variables are starred. Assume

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Consider the following world that consists of two economies: Home Economy and Foreign Economy. Foreign variables are starred. Assume that both countries either use the same currency, or that the real exchange rate is fixed and normalized to one. C = 10+0.6(YT) I = T G = E T = T Q = 0.1Y X = 0.1Y* 1. Solve for the equilibrium income in the domestic economy, in terms of, l, C, T and the output of the Foreign Economy, Y*. (5 points) 2. Assume now the fpllowing values for investment, government spending and taxes: l = 10, G = 10, and T = 10, find the relationship between the equilibrium output in the domestic economy, Y, and the level of output in Foreign Economy, Y*. (5 points) 3. Assume Foreign Economy is identical to Home Economy and has the same equations. Solve for equilibrium output in each economy, Y and Y*. (8 points)

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