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Assume that the following equations characterize a large open economy: (1) Y = 5,000 (2) Y = C + I + G + NX (3)

Assume that the following equations characterize a large open economy:

(1) Y = 5,000

(2) Y = C + I + G + NX

(3) C = 1/2(Y - T)

(4) I = 2,000 - 100r

(5) NX = 500 - 500

(6) CF = -100r

(7) CF = NX

(8) G = 1,500

(9) T = 1,000

Where NX is net exports, CF is net capital outflow, and is the real exchange rate.

  1. If T rises to 1250, what are the new values of I, CF, and ?

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