Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help on this two separate macroeconomic questions Consider an economy described by the following equations: Y = C + I + G +

I need help on this two separate macroeconomic questions

image text in transcribedimage text in transcribed
Consider an economy described by the following equations: Y = C + I + G + NX Y = 8,000 G = 2,500 T = 2,000 c = 500 +2/3(Y T) I = 900 - 50r NX = 1,500 - 2506 r = r* = 8 a. In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate b. Suppose G is reduced to 2,000. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you find. c. Now suppose the world interest rate falls to 3%, and G is again at 2,500. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you find. g'aveling in Mexico is much cheaper now than it was ten years ago,\" says a friend. \"Ten years ago, a dollar bought 10 pesos; now a dollar buys 15 pesos.\" Is your friend right or wrong? Inflation over the ten year period was 25% in the US and 100% in Mexico, has it become more or less expensive to travel in Mexico? Use a concrete example, such as an American hot dog versus a Mexican taco to convince your friend

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Economics questions

Question

5.2 Summarize the environment of recruitment.

Answered: 1 week ago