Information Flag Consider an open economy. Consumption spending is given by C = 7000 + 0.80Y", investment spending by / = 1500, government spending by G = 2500. question Exports are EX = 3500 + 650q and imports are IM = 1500 + 0.20Y" - 350q. The price level in this economy is P = 4.0 and abroad is P* = 6.0. Taxes are T = 1000. Question 25 What is the DD schedule? If taxes increase, how will it shift? Incorrect 0.00 points out Select one: of 1.00 P Flag O a. Y = 31,000 + 3,750E, it will shift to the left. question b. Y = 38,500 + 750E, it will shift to the left. * O c. Y = 31,000 + 3,750E, it will shift to the right. O d. Y = 38,500 + 750E, it will shift to the right. The correct answer is: Y = 31,000 + 3,750E, it will shift to the left. Question 26 If the nominal exchange rate is E = 2.50, what is the equilibrium output? If the exchange rate increases, what will happen to equilibrium output? Why? Incorrect 0.00 points out Select one: of 1.00 O a. Y = 86,875; it will increase, since a higher exchange rate makes exports more expensive and imports cheaper, decreasing the current account, P Flag question aggregate demand, and, in equilibrium, output. b. Y = 86,875; it will increase, since a higher exchange rate makes exports cheaper and imports more expensive, increasing the current account, aggregate demand, and, in equilibrium, output. x O c. Y = 40,375; it will increase, since a higher exchange rate makes exports more expensive and imports cheaper, decreasing the current account, aggregate demand, and, in equilibrium, output. O d. Y = 40,375; it will increase, since a higher exchange rate makes exports cheaper and imports more expensive, increasing the current account, aggregate demand, and, in equilibrium, output. The correct answer is: Y = 40,375; it will increase, since a higher exchange rate makes exports cheaper and imports more expensive, increasing the current account, aggregate demand, and, in equilibrium, output