Question

Consider the following economy C = 0.85 (Y – T) + Ca ; Ca = 600 – 25 R ; T = 450 + 0.225 Y; IP = 1500 – 30 R ; G =1900; NX = 950 – 0.0625 Y. a) What are the values of the autonomous net export NXa and the autonomous taxes Ta (hint: see the formulas and compare) b) Compute the multiplier c) Derive the equation of the autonomous spending. d) Derive the equation of the IS curve e) Compute the values of the AP and YIS for R =3.25 f) Compute the values of the Ca, C, T, IP, and NX for income Y = 20,000 and R = 3.25 . Is this country a net importer or net exporter?

Answer 1

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