Question: (3.3) Goods market in an open economy Consider an open economy characterized by the following equations: C=100+0.6(Y-T) I=200+ 0.2Y IM 0.3Y+200 X=0.4Y 600 +
(3.3) Goods market in an open economy Consider an open economy characterized by the following equations: C=100+0.6(Y-T) I=200+ 0.2Y IM 0.3Y+200 X=0.4Y 600 + 400 I moreover, G= 200, T-200, = 1, Y = 2000. (a) Calculate the government spending multiplier m, ie. in equilibrium it should hold AY MAG. Calculate the equilibrium values of Y,C, I, IM/E,X, NX. (b) What is the impact of increasing government spending to G= 220 in terms of the new equilibrium values Y', IM'/e, X', NX"? (e) What is the impact of an increased foreign income Y2200 (G200) in terms of the new equilibrium values Y', IM'/e, X', NX"? (d) What is the impact of a real depreciation e' 0.9 (G200, Y2000) in terms of the new equilibrium values Y', IM'Je, X', NX"
Step by Step Solution
3.45 Rating (155 Votes )
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
