Consider the following table showing national income and imports in billions of dollars. Assume that the level

Question:

Consider the following table showing national income and imports in billions of dollars. Assume that the level of exports is \(\$ 300 \) billion.

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a. Compute the level of net exports for each level of national income and fill in the table.

b. Plot the net export function on a scale diagram. Explain why it is downward sloping.

c. Suppose desired imports are given by \(I M=\) \(m_{0}+m_{1} Y\). Using the data in the table, determine the values of \(m_{0}\) and \(m_{1}\).

d. What is the interpretation of \(m_{0}\) ?

e. What is the interpretation of \(m_{1}\) ?

f. Suppose that a major trading partner experiences a significant recession. Explain how this affects the net export function in your diagram.

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Related Book For  book-img-for-question

Macroeconomics

ISBN: 9780133910445

15th Edition

Authors: Christopher T S Ragan

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