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Consider the following Open Economy: (billions of dollars) Personal Disposable Income (YD) = Income (Y) - T +TR. Consumption (C) = 500 + .9(YD). Transfers
Consider the following Open Economy: (billions of dollars) Personal Disposable Income (YD) = Income (Y) - T +TR. Consumption (C) = 500 + .9(YD). Transfers (TR) = 100. Taxes = 400. Government Spending (G) = 500 Investment (1) = 550 -1000*interest rate (r). Interest rate (r) = .05 (5%) Exports (X) = 500. Imports (IM) = 600. In this economy, Equilibrium Income is the Government Budget is and the Balance of Trade is
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