Problem 3. Consider a world with only two countries, which are designed to home (H) and Foreign (F). Output in each is full employment output (Y*). Home. Foreign. Cu=100+ 0.5Yn - 500r Cr=225+0.7Yn - 600r I=300 - 500r Ir=250 200r Gu=155 Gr=190 Y*u= 1000 Y*r=1200 a) Write out national savings for Home and Foreign as a function of r. b) What is the equilibrium world interest rate? c) What is the equilibrium values of Consumption, National Savings, Investment and Current account for Home? d) What is the equilibrium values of Consumption, National Savings, Investment and Current account for Foreign? e) Now assume that there is an exogenous shock to investment at home due to an increase in TFP. New I = 600 500r. What happens to of Consumption, National Savings, Investment and Current account for Home? f) Under the e conditions what happens to of Consumption, National Savings, Investment and Current account for Foreign