3) Consider the following model of a macroeconomy C = 1000 + 0.9Y G= 0 I = 700 - 40i TA = 0 Q = 200 + 0.1Y - 0.05et M/P = 800 X = 400 + 0.02et L(i,

Question i and ii with the variables given, how do you solve this?

3) Consider the following model of a macroeconomyC = 1000 + 0.9YG= 0I = 700 - 40iTA = 0Q = 200 + 0.1Y - 0.05etM/P = 800X = 400 + 0.02etL(i, Y) = 0.5Y - 50iif = 6.0i = if {ef+1/et}i) Assuming that et_ef. = et = 110 determine whether this economy wouldbe in external equilibrium (zero current account balance) or not. (4 marks)ii) With et = 100, what value for the future expected exchange rate, ef+1,would result in external equilibrium (zero current account balance) for thiseconomy? (4 marks)