Question 23 Use the information below to answer the following questions Show all work.co 8pt;Total = 18 points) Goods Market Money Market RO Po C= 10040811-7) 1-900-3,000 G-500;T=300 TB = 400/1-4/E) -0.2017-2001 TOO M-6000 1057-1.600 P=10 1. a) Find the home economy's equilibrium interest rate and the equilibrinutile consumption, investment, trade balance, and exchange rate at the home economistallerin b) Given that the Home monetary authority implements a contractionary monetary policy to reduce the money supply to 1000 find the one tous equilibrium levels of output, consumption, interest rate, bestent echange rate and trade balance. Show your work and report your answers in the following table M. M. Home equilibrium Consumption Hame interest rate Investment Exchange rate Trade balonce Show Work c) Use the IS-LM-FX graph, and illustrate in words how this change in money supply affects the economy. On your graph, label the following values of the equilibrium home output, interest tite, exchange rate, and domestic return both for M - 4000, and M 1000 Work and Graph: Provide appropriate economic Intuition behind the direction of changes in the lone economy's output, consumption, investment, interest rate, trade balance, and exchange rate. Explain if the changes follow the associated theory taught in class. Question 23 Use the information below to answer the following questions Show all work.co 8pt;Total = 18 points) Goods Market Money Market RO Po C= 10040811-7) 1-900-3,000 G-500;T=300 TB = 400/1-4/E) -0.2017-2001 TOO M-6000 1057-1.600 P=10 1. a) Find the home economy's equilibrium interest rate and the equilibrinutile consumption, investment, trade balance, and exchange rate at the home economistallerin b) Given that the Home monetary authority implements a contractionary monetary policy to reduce the money supply to 1000 find the one tous equilibrium levels of output, consumption, interest rate, bestent echange rate and trade balance. Show your work and report your answers in the following table M. M. Home equilibrium Consumption Hame interest rate Investment Exchange rate Trade balonce Show Work c) Use the IS-LM-FX graph, and illustrate in words how this change in money supply affects the economy. On your graph, label the following values of the equilibrium home output, interest tite, exchange rate, and domestic return both for M - 4000, and M 1000 Work and Graph: Provide appropriate economic Intuition behind the direction of changes in the lone economy's output, consumption, investment, interest rate, trade balance, and exchange rate. Explain if the changes follow the associated theory taught in class
