Suppose Ghanas economy is described by the following equations:

Y = C + I + G + NX (Income Identity)

Y = 6,000 (Income)

G = 1.200 (Government Expenditure)

T =1,000 (Tax)

C = 250 +0.75 (Y - T) ( Consumption Expenditure Function)

I = 1,000 - 100r (Investment function)

NX = 400 - 400E (Net Exports function)

r = r* = 5 (Interest rate)

(a) Solve for

(i) The National saving

(ii) The trade balance

(iii) The equilibrium exchange rate.

(iv) Based on your answer in (iii) would you describe Ghana as a net borrower or a net

lender and why?