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Consider a world with only two countries, which are designated the home country (H) and the foreign country (F). Output equals its full-employment level in
Consider a world with only two countries, which are designated the home country (H) and the foreign country (F). Output equals its full-employment level in each country. You are given the following information about each country: Home Foreign Consumption, CH = 340 + 0.4YH - 200r; CF = 500 + 0.4YF - 300r; Investment, IH = 100 - 200r; IF = 200 - 300r; Full-employment output, YH = 1,000; YE = 1,500; Government purchases, GH = 125. GF = 250. a. Write national saving in the home country and in the foreign country as functions of the world real interest rate, r" (enter all coefficients as integers). Home: SH = +w
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