Assuming that Nations 1 and 2 are both large, and starting from the equilibrium level of national

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Assuming that Nations 1 and 2 are both large, and starting from the equilibrium level of national income and equilibrium in the trade balance in Nation 1, and given that MPS1 = 0.20, MPS2 = 0.15, MPM1 = 0.20, and MPM2 = 0.10, find the change in the equilibrium level of national income and the trade balance in Nation 1 for:
(a) An autonomous increase in the exports of Nation 1 of 200 that replaces domestic production in Nation 2.
(b) An autonomous increase in investment of 200 in Nation 1.
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International Economics

ISBN: 978-1119915737

11th edition

Authors: Dominick Salvatore

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