Question

i need help with this question quick as possible also this is one question

1 Consider hypothetical USA and European (EUR) economies with the following characteristice Money Market 03) Interest Parity Net Exports lnitially, let A-8,000, B-250, c " О.03, D" 100-“ 4.5.剧鄙슈]-$1.05, Hュー1000 (note that " is negative), J-4, and Yesa16, 000 a. Solve for is. and NX. b Suppose the European Cestral expansionary How will this impact NXxts47 Explain in words and s Bank pursues expansionary monetary polley and lowers ie to 4 c. Suppose instead, that the USA is experiencing a severe recession that lowers YUSA by 5 percent. How will this impact NxUsA Explain in words and show mathematically

Answer 1

USA Me 32-48口 USA EOR USA EUR USA Assume Eur 0.02 = ! 1.0714 0.98 EUR

USA EUK OSA Now ithen USA EoR USA USA EUR USA- Eu K 1 05 = 0709 1 48 灭= oppo tunity c。re of aus deposits decrea, e, a p investors sel cur deposito park Hh eiv investment in ViD deposilo EUR

USA 니 'ぐ2.oo こ USA 8 USA USA hen U export, clerreauc ,in crear. imporl)