GDP between the two years and discuss the result. GDP in 2018; c) the rates of...

 

Transcribed Image Text:

GDP between the two years and discuss the result. GDP in 2018; c) the rates of 2. Given the following data representing the goods market of an open economy: Marginal Propensity to consume Direct Tax rate Investment Gov. spending Autonomous consumption Exports Marginal propensity to import Autonomous Imports Transfers Autonomous Taxation 0.55 0.1 4000 9500 340 3000 0.15 100 90 20 Using the Keynesian cross-model, compute: a) The equilibrium level of the aggregate output; b) The value of public savings corresponding to the equilibrium level of the output; say if the country is running a budget deficit or surplus; c) The value of net exports corresponding to the equilibrium level of the output; say if the country is running a trade deficit or surplus; d) The value of the aggregate output for which the system would run a trade balance; e) The variation in the equilibrium level of the aggregate output due to a variation in the government spending equal to AG=-1500; Compute the impact on public savings of the policy adopted in e) and discuss. f) 2. After having defined the IS and LM curves, show in a diagram the general equilibrium position of the economic system. Then show on the same diagram and discuss the impact on the equilibrium position of a tightening monetary policy. 4. Define the nominal and the real exchange rates. Then discuss how changes in the real exchange rate affect imports and exports. GDP between the two years and discuss the result. GDP in 2018; c) the rates of 2. Given the following data representing the goods market of an open economy: Marginal Propensity to consume Direct Tax rate Investment Gov. spending Autonomous consumption Exports Marginal propensity to import Autonomous Imports Transfers Autonomous Taxation 0.55 0.1 4000 9500 340 3000 0.15 100 90 20 Using the Keynesian cross-model, compute: a) The equilibrium level of the aggregate output; b) The value of public savings corresponding to the equilibrium level of the output; say if the country is running a budget deficit or surplus; c) The value of net exports corresponding to the equilibrium level of the output; say if the country is running a trade deficit or surplus; d) The value of the aggregate output for which the system would run a trade balance; e) The variation in the equilibrium level of the aggregate output due to a variation in the government spending equal to AG=-1500; Compute the impact on public savings of the policy adopted in e) and discuss. f) 2. After having defined the IS and LM curves, show in a diagram the general equilibrium position of the economic system. Then show on the same diagram and discuss the impact on the equilibrium position of a tightening monetary policy. 4. Define the nominal and the real exchange rates. Then discuss how changes in the real exchange rate affect imports and exports.

Answer rating: 100% (QA)

SOLUTION 2 a To compute the equilibrium level of the aggregate output we need to find the point where the aggregate demand AD curve intersects the 45degree line representing the equilibrium condition ... View the full answer