Q9

Question 9: Investment & Exchange Rates (a) Given the following parameters for a closed economy: .,, & , Calculate national savings (S), including the breakdown of private and public savings. (b) if $1NZ can buy $0.78US, then how much can $1US buy of SNZ? (c) If a pint of beer costs $8 in New Zealand and ES in the United Kingdom, assuming purchasing power parity holds, what is the UKE-NZS exchange rate? (d) If the nominal exchange rate between Australia and New Zealand is (AUSS- NZ$) is 0.95 and a widget costs $99 in New Zealand and $90 in Australia, calculate the real exchange rate. Interpret your answer.Question 9: Investment & Exchange Rates (10 MARKS) (a) Given the following parameters for a closed economy: Y = 200,T = 40,C = 120, & 1 = 30, Calculate national savings (S), including the breakdown of private and public savings. (b) If $1NZ can buy $0.78US, then how much can $1US buy of $NZ? (c) If a pint of beer costs $8 in New Zealand and E5 in the United Kingdom, assuming purchasing power parity holds, what is the UKE-NZ$ exchange rate? (d) If the nominal exchange rate between Australia and New Zealand is (AUS$-NZ$) is 0.95 and a widget costs $99 in New Zealand and $90 in Australia, calculate the real exchange rate. Interpret your