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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(}'-T} T=400 I
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(}'-T} T=400 I = 400 - 2,0001' (a9 = 0) L = [LSY 5,000.5 G=500 TB = 400(1- 2H3] - 0.3(Y100) 3. Find the MPC, MPCF , MPC'\" , and MP3 for this economy. b. Find an expression for the exchange rate as a function of interest rate. e. Express 15 and LM curves as functions of the interest rate. [1. 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 ofthis policy on the following variables: Y , i , E , C , I , TB . You do not have to calculate the new values
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