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The following table describes the goods market, money market and the FX market in an economy: Goods Market Money Market FX Market C=300+0.75(YT) T=400 M=1075
The following table describes the goods market, money market and the FX market in an economy: Goods Market Money Market FX Market C=300+0.75(YT) T=400 M=1075 E3=2 I = 400 2,0001' (ae= 0) L = 0.51' 5,0001' 1" = 8% G = 500 P = 2 TB = 400(1 2ij 0.3(Y 100) a. Find the MP0, WCF,MPCH , and MPS for this economy. b. Find an expression for the exchange rate as a inction of interest rate. c. Express IS and LM curves as functions of the interest rate. d. Find the equilibrium (home) interest rate, i, and the equilibrium (home) output, Y. Calculate consumption, investment, trade balance, and exchange rate at the economy's equilibrium. e. Assume the goVernment implements an expansionary monetary policy and increases the government spending to 600. Using the ISLMFX model, show graphically and explain the impact of this policy on the following variables: Y , i , E , C , I , TB . You do not have to calculate the new values
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