Suppose you are given the following information about the Small Open Economy (SOE) of Imaginationland who measure their currency in dollars. The current world interest rate is r^w = 5%, the current saving in the economy is $120 million, and the current investment is $150 million.

(a) (2 marks) What is the trade balance here? If the country produces $25 million in exports, what is the overall amount of imports? (b) (9 points) Create a diagram showing both the Market for Loanable Funds and the Market for Foreign Exchange (for ease, assume that the real exchange rate is 8). Make sure to label the graph properly including the axis, curves, and intersection points. Note: full marks will only be given for properly labelled diagrams that include the numbers for the problem. (c) (2 points) Suppose the country has become concerned about their position in the world and decides to implement a tariff. Explain what happens in the economy including who is helped or hurt.