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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.) Solve these equations for the equilibrium values of C, I, NX, CF, r, and. (Hint: Consider simultaneous equations or substitution to solve for r and)

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