Question
Consider a small open economy described by the following equations: Y=C+I+G+NX, Y=6000, G=2000, T=2000, C=350+0.75*(Y-T), I=2000-50*r, NX=1000-500*. Then based on the given information a. Solve
Consider a small open economy described by the following equations: Y=C+I+G+NX,
Y=6000, G=2000, T=2000, C=350+0.75*(Y-T), I=2000-50*r, NX=1000-500*. Then based
on the given information
a. Solve for national saving, investment, the trade balance, and the equilibrium exchange
rate and illustrate graphically (2 point)
b. Suppose now that G rises to 2250. Solve for national saving and the equilibrium
exchange rate. Explain and illustrate graphically the effect of increases in government
expenditure on equilibrium (2 point)
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Economics for Environmental Studies A Strategic Guide to Micro and Macroeconomics
Authors: Alfred Endres, Volker Radke
1st edition
364231192X, 3642311925, 9783662548264, 3662548267, 978-3642311925
