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I wanted to see if I did my work correctly. I would appreciate any feedback 1. Given the following variables in the open economy aggregate

I wanted to see if I did my work correctly. I would appreciate any feedback

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1. Given the following variables in the open economy aggregate expenditure model, autonomous consumption Co - 200, autonomous investment fe = 200, government spending Go = 100, export spending N't = 100 autonomous import spending M. = 100, taxes To = 0, marginal propensity to consume c = 0.B, marginal propensity to invest i, = 0.1, and marginal propensity to import m, = 0.15, a. Calculate the equilibrium level of income for the open economy aggregate expenditure model. Y=C++G+NX E= (Co+ MPC * (Y-T)) + 1+ MPI * Y) + Gu+ Xo- (Mo+ MPM *Y) Y= 200 + 200 + 100 + (100-100) = 500 Y= (0 81X + (Q.!)Y -(0.15) Y = 0.75Y 1Y-0.75Y = 500 = 0.25Y/0.25 = 500/03.25=$2,000 Y= $2,000 b. If there is an increase in autonomous import expenditure from 100 to 200 resulting from an increase in the currency exchange rate, calculate the new equilibrium level of income and the value of the multiplier. Y=200+0.BY+200 + 0.TY+100+100-(200+0.15Y) Y= 200+200+100+106-200-0.8Y+0.IY-0.15Y Y= 400+6.75Y Y-0.75Y=400 0.25Y=400 Y=400/0.25 New level of equilibrium Y= $1,600 Multiplier = Change in income change in autonomous spending = (2,000-1 600)4200-100) = 400/100, =4 C. Compared with the original equilibrium in part a, if the government decides to impose taxes 7/ of 100, calculate the new equilibrium level of income. Y=200+0.5(Y-160)+ 200+0.17+100+160-(100+0.15Y) Y=200-80+200+100-100-100+0.8Y+0.IY-0.15Y Y=420+0.75Y Y-0.75Y=420 0.25Y=420 Y=420/0.25 Y=1680 2. Remember that consumption has an autonomous component and is a function of disposable income, Ya, where YA = Y - TF

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