Consider the following economy:

i. Find the value of the open economy multiplier.

 ii. What is the equilibrium level of GDP for this economy?
iii. What is the initial current account balance for this country?
iv. Suppose that government spending falls by 50. What will happen to the equilibrium level of GDP? What will happen to the current account balance?

v. Beginning at the initial equilibrium point, suppose instead exports rise by 50. What will happen to the equilibrium level of GDP? What will happen to the current account balance?

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s = 0.2 m = 0.2 TX = 200 EX 10 = 500 =22 400 Go = 250