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The entire question is in the below screenshot 3) An open economy with zero capital mobility consists of the following components: C = 2000 +

The entire question is in the below screenshot

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3) An open economy with zero capital mobility consists of the following components: C = 2000 + 0.6(Y - T) I = 300 - 3000i G = 300 T = 300 NX = 400 - 200E M = 500 Md = 0.2Y - 1000i Where Y is output, C is consumption, I is investment, i is the interest rate, T is the lump sum tax, G is government spending, NX is net exports, E is the nominal exchange rate (expressed in terms of foreign currency per unit of domestic currency), M is the money supply and Md is the demand for money. a) Derive the IS, LM, and Balance of Trade (BT) equations for this economy. b) What are the equilibrium levels of income and interest rates for this economy? c ) What are the two ways to measure capital account openness of any economy? Which of the two measures is better and why? (9+6+5 )

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