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Given the following information, An = 5000 n = 0.75 b = 41 To = 100 m = 0.15 135 = 250 A13 = 1000

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Given the following information, An = 5000 n = 0.75 b = 41 To = 100 m = 0.15 135 = 250 A13 = 1000 I3 = 20 i'=15 k=0.4 h=90 P=1 answer the questions below: A. PERFECT CAPITAL MOBILITY 1. Specify the system of equations for an open economy with exible exchange rates and perfectly mobile capital. 2. Calculate the equilibrium output (17'), interest rate (3), and real exchange rate (ti); and illustrate the equilibrium in this model using diagrams in (i. Y) and (Y, e) spaces. 3. By how much will 17,3, and ti change if MS increases by 25%

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