Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
3. Now let's add Net Exports into the model. Suppose that in the economy described in the last two problems Net Exports are X,, =-
3. Now let's add Net Exports into the model. Suppose that in the economy described in the last two problems Net Exports are X,, =- 1500. The model now becomes: C = 100,000 + .92Ya' I= 40,000 G = 25,000 Yd = Y T T= .03Y Xn = 1500 C, I, G, T and Ya! are as before. Equilibrium requires that the value of the economy's output be matched by Aggregate Demand, but Aggregate Demand now includes Net Exports. So the equilibrium condition is: Y=C+I+G+Xn a. What is the equilibrium level of aggregate output for this economy? c. Check the solution by showing that at the equilibrium level of Y total spending exactly matches the level of output. (1. What is the Keynesian multiplier for this economy? If X" increases by $300, what will be the new equilibrium level of 1'? 4. A bond that will mature in three years has a coupon payment of $1200; interest is paid and compounded annually. Its face value is $10,000 and the yield on bonds of similar risk and maturity is 7.5%. What will be the price of this bond? Suppose the market rate of interest rose to 12%; what would happen to the price of the bond
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/06/6675a5f7521b8_2306675a5f6d2040.jpg)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started