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So, here as the consumers confidence decreases implied government needs to increase its spending in order to achieve its target.
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2. Consider the following short-ru model of an open economy: Y C+I+G+NX = 50 IM = -EY The domesti...
1. Consider the following economy of Syldavia (a small open economy) Y=C+I+G+NX , NX = S-I...
1. Consider the following economy of Syldavia (a small open economy) Y=C+I+G+NX , NX = S-I Y=8000 G=750 T=750 C=1000+0.75(Y-T) I=1000-100r NX=500-500e r=r*=5 d. [ 5 points] Suppose the world interest rate drop from r=5 to 2percent (assume government G=750). Find the national saving, investment, trade balance, capital outflow and equilibrium exchange rate.
Consider a small open economy with floating exchange rates. The LM curve of this economy is...
Consider a small open economy with floating exchange rates. The LM curve of this economy is given as ??=20,000???200+(????), and the IS curve is given as ??=500?20,000??+????, where ????=600?300??. Suppose that ??=1,??=100, and the world interest rate (???) is 0.025. 1) Find out the equilibrium values of output (Y), exchange rate (e), and net export (NX) of this economy. ANSWERS = Y = 400, NX = 400, e = 2/3. 2) Suppose the central bank increases the money supply to...
A small open economy has the following relationships among its variables: C = 50+0.75 (Y-T) I=200-20r...
A small open economy has the following relationships among its variables: C = 50+0.75 (Y-T) I=200-20r NX = 200-50e M/P = Y-40r G = 200 T= 200 M=3.000 P= 3 r* = 4 Q1. Please calculate the following: Equilibrium Exchange Rate Net Export Income Q2. What will be the impact of increase in G by 100 on the exchange rate, income, net exports, and the money supply?
Consider the Mundell-Fleming short-run model of a small open economy under floating exchange rates described by...
Consider the Mundell-Fleming short-run model of a small open economy under floating exchange rates described by the following equations (1) through (7). Assume that there are free capital flows and that interest rate parity holds so that where 5 is the world interest rate. (1) Cu 400+0.8 (Y-D: (2) 1 = 850-60r (3) G = 1200; (4) T=1000 + 0.25Y: (5) NX = 600 - 200e : (6) Y=C+I+G+ NX; (7) (M/P )= 0.5Y -50rt. Equation (6) is the goods...
PROBLEM NO 2. An Open Economy in the Short Run and The Medium Run (25 Points)...
PROBLEM NO 2. An Open Economy in the Short Run and The Medium Run (25 Points) a. Indonesia's equilibrium condition of goods and services market can be expressed by the following equation: Y = CAY - T) + (Y, r) +G-IMY, )) { + X(Y*, £) where: Y=domestic output; Y*= foreign output; C= consumption: T=tax; l=investment, r=real interest rate; G=government spending, € = Real Exchange Rate. If it is assumed that the Marshall-Lerner condition holds. Explain in words the effects...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y)...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y) Goods Money C = 50+0.8(Y- T) M 3000 I = 200-20r r*=5 NX = 200-508 P = 3 G=T= 150 L(Y, r) Y - 30r 1- find the IS* equation (hint : y as a function of e) 2- find the LM* equation (hint, also relates y and maybe e) 3-draw the IS-LM curve I y 4- find the equilibrium interest rate (trick question!)...
2. A small open economy is described by the following equations: C=50+0.75(Y-T) 1- 200 20 NX-200-50...
2. A small open economy is described by the following equations: C=50+0.75(Y-T) 1- 200 20 NX-200-50 G- 200 T-200 M 3000 P-3 r' = 5 (a) Derive and graph the IS and LM* curves. (b) Calculate the equilibrium exchange rate, level of income, and net exports (c) Assume a floating exchange rate. Calculate what happens to the exchange rate, the level of income, net exports, and the money supply if the government increases spending by 50. Use a graph to...
economics 2. The Economy of Bulgaria can be described as: Y=C+I+G+NX, NX = S-1 Y=1000 G=300...
economics
2. The Economy of Bulgaria can be described as: Y=C+I+G+NX, NX = S-1 Y=1000 G=300 T=300 C=0.95(Y-T) I=500-100r NX=135-100e, where Exports = 135-25e Imports = 75e r=r*=2 a. [7 points] Find the national saving, investment, capital outfow, trade balance, exports, imports and equilibrium exchange rate. b. [7 points) The above scenario shows the economy of Bulgaria before the outbreak of world war II. It is a net borrower. When the war ends it finds itself in the following situation:...
C. Consider an economy described by the following equations: Y = C+I+G+NX K = 2,500 40,000...
C. Consider an economy described by the following equations: Y = C+I+G+NX K = 2,500 40,000 = K0.5 0.5 = 2000 T = 2000 C = 600+.8 (Y-T) I = 2000 - 40r NX = 1000 - 400€ - 0.002Y T = r = 10 1. [4 points) What is the long-run level of output? 2. [7 points) What is the equilibrium value of the real exchange rate? 3. [9 points) What are the equilibrium values of national saving, investment...
1. In an economy which has a national income identity as the following; Y= C+ I + G + NX where C ...
I need help with this.
1. In an economy which has a national income identity as the following; Y= C+ I + G + NX where C = 400 + 0.6 Yd,; 1 = 1000-4600 r, G-1240 T-200 +0.25 Y; NX-400-0.05Y-8 00 e ( ofcourse, Yd=Y-T) Where e- foreign currency/ domestic currency, and initially set at e 1.25+2.5R The money demand function is Md- 0.75 Y-7500 r, and money supply is set by the Central Bank at 450. All calculation...
A small open economy has the following relationships among its variables: C = 50+0.75 (Y-T) I=200-20r NX = 200-50e M/P = Y-40r G = 200 T= 200 M=3.000 P= 3 r* = 4 Q1. Please calculate the following: Equilibrium Exchange Rate Net Export Income Q2. What will be the impact of increase in G by 100 on the exchange rate, income, net exports, and the money supply?
Consider the Mundell-Fleming short-run model of a small open economy under floating exchange rates described by the following equations (1) through (7). Assume that there are free capital flows and that interest rate parity holds so that where 5 is the world interest rate. (1) Cu 400+0.8 (Y-D: (2) 1 = 850-60r (3) G = 1200; (4) T=1000 + 0.25Y: (5) NX = 600 - 200e : (6) Y=C+I+G+ NX; (7) (M/P )= 0.5Y -50rt. Equation (6) is the goods...
PROBLEM NO 2. An Open Economy in the Short Run and The Medium Run (25 Points) a. Indonesia's equilibrium condition of goods and services market can be expressed by the following equation: Y = CAY - T) + (Y, r) +G-IMY, )) { + X(Y*, £) where: Y=domestic output; Y*= foreign output; C= consumption: T=tax; l=investment, r=real interest rate; G=government spending, € = Real Exchange Rate. If it is assumed that the Marshall-Lerner condition holds. Explain in words the effects...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y) Goods Money C = 50+0.8(Y- T) M 3000 I = 200-20r r*=5 NX = 200-508 P = 3 G=T= 150 L(Y, r) Y - 30r 1- find the IS* equation (hint : y as a function of e) 2- find the LM* equation (hint, also relates y and maybe e) 3-draw the IS-LM curve I y 4- find the equilibrium interest rate (trick question!)...
2. A small open economy is described by the following equations: C=50+0.75(Y-T) 1- 200 20 NX-200-50 G- 200 T-200 M 3000 P-3 r' = 5 (a) Derive and graph the IS and LM* curves. (b) Calculate the equilibrium exchange rate, level of income, and net exports (c) Assume a floating exchange rate. Calculate what happens to the exchange rate, the level of income, net exports, and the money supply if the government increases spending by 50. Use a graph to...
economics
2. The Economy of Bulgaria can be described as: Y=C+I+G+NX, NX = S-1 Y=1000 G=300 T=300 C=0.95(Y-T) I=500-100r NX=135-100e, where Exports = 135-25e Imports = 75e r=r*=2 a. [7 points] Find the national saving, investment, capital outfow, trade balance, exports, imports and equilibrium exchange rate. b. [7 points) The above scenario shows the economy of Bulgaria before the outbreak of world war II. It is a net borrower. When the war ends it finds itself in the following situation:...
C. Consider an economy described by the following equations: Y = C+I+G+NX K = 2,500 40,000 = K0.5 0.5 = 2000 T = 2000 C = 600+.8 (Y-T) I = 2000 - 40r NX = 1000 - 400€ - 0.002Y T = r = 10 1. [4 points) What is the long-run level of output? 2. [7 points) What is the equilibrium value of the real exchange rate? 3. [9 points) What are the equilibrium values of national saving, investment...
I need help with this.
1. In an economy which has a national income identity as the following; Y= C+ I + G + NX where C = 400 + 0.6 Yd,; 1 = 1000-4600 r, G-1240 T-200 +0.25 Y; NX-400-0.05Y-8 00 e ( ofcourse, Yd=Y-T) Where e- foreign currency/ domestic currency, and initially set at e 1.25+2.5R The money demand function is Md- 0.75 Y-7500 r, and money supply is set by the Central Bank at 450. All calculation...
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