Consider an economy described by the following equations: Y = C + I + G + NX, Y = 5,000, G = 1,000, T = 1,000, C = 250 + 0.75(Y – T), I = 1,000 – 50r, NX = 500 – 500ε, r = r* = 5.
In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.
Private Saving =
Public Saving =
National Saving =
Investment =
Net Exports (Trade Balance) =
Exchange Rate =
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Consider an economy described by the following equations: Y = C + I + G + NX, Y = 5,000, G = 1,000, T = 1,000, C = 250 + 0.75(Y – T), I = 1,000 – 50r, NX = 500 – 500ε, r = r* = 5.
Suppose now that G rises to 1,250. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.
Private Saving =
Public Saving =
National Saving =
Investment =
Net Exports (Trade Balance) =
Exchange Rate =
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Consider an economy described by the following equations: Y = C + I + G + NX, Y = 5,000, G = 1,000, T = 1,000, C = 250 + 0.75(Y – T), I = 1,000 – 50r, NX = 500 – 500ε, r = r* = 5.
Now suppose that the world interest rate rises from 5 to 10 percent. (G is again 1,000.) Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.
Private Saving =
Public Saving =
National Saving =
Investment =
Net Exports (Trade Balance) =
Exchange Rate =
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