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Question 3: [20 marks] The following equations describe the domestic economy: C = 0.75Y, I = 25, G = 0, X = 0.025Y*, and Q = 0.25Y 2 And the following equations describe the foreign economy: C* = 0.75 Y* [* = 250, G* = 0, X* = 0.25 (Y + 500) , and Q* = 0.15Y* Suppose the real exchange rates in both economies are fixed and equal to one. + 1. Find equilibrium Y and Y*. 2. Suppose that the domestic economy experiences a 20% drop in investment from 25 to 20. Find the percentage decreases in equilibrium Y and Y*.Suppose the real exchange rates in both economies are xed and equal to one. 1. 2. Find equilibrium Y and Y\". Suppose that the domestic economy experiences a 20% drop in investment from 25 to 20. Find the percentage decreases in equilibrium Y and Y\". Suppose that the foreign economy experiences a 20% drop in investment from 250 to 200. Domestic investment remains at 25. Find the percentage decreases in equilibrium Y and Y\". . Think of Canada as the domestic economy and the US as the foreign economy. Compare the results that you obtained in parts (2) and (3) above, and comment