Question: Can I get an answer with explanations? 2) Consider an economy described by the following equations: Y=C+I+G+NX Y = 8,000 G = 2,500 T =
Can I get an answer with explanations?

2) Consider an economy described by the following equations: Y=C+I+G+NX Y = 8,000 G = 2,500 T = 2,000 C = 500 +2/3(Y T) I = 900 50r NX = 1,500 - 2508 r = r* = 8 a) In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. b) Suppose now that G is cut to 2,000. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you nd. c) Now suppose that the world interest rate falls from 8 to 3 percent. (G is again 2,500). Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you nd
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
