Question: please solve this and add the corresponding graphs to each part 4 . Use the closed economy, supply and demand model of financial markets and

please solve this and add the corresponding graphs to each part
4. Use the closed economy, supply and demand model of financial markets and its corresponding
equations to answer part (a). Use the small open economy model for net exports and net capital
outflow along with its corresponding equations to answer parts (b)-(c).
a.(10 points) Say that the governments of large open economies, such as the United States,
the United Kingdom, and many EU member countries, implement various budget-neutral
investment tax credits to incentivize investment in health and infrastructure. Depict and
explain what happens to the equilibrium real interest rate and equilibrium quantity of
loanable funds that go into investment in the global market for loanable funds.
7 points for graph, 3 points for explanation
b.(40 points) From the perspective of the Philippines, a small open economy, depict and
explain what happens to the Philippines
domestic saving
domestic investment demand and quantity of domestic investment spending
net capital outflow
net exports demand and quantity of net exports
real exchange rate
nominal exchange rate
Make sure you answer the following questions in your explanation:
Is the Philippines a net lender or net borrower in the market for loanable funds?
According to your graphs, what (if anything) happens to the Philippines net exports?
Did the Philippine peso appreciate, depreciate, or stay the same?
25 points for graphs, 15 points for explanation
(10 points) Find out whether the Philippines trade balance was positive or negative over
the last 5-10 years and depict that in your graphs. Be sure to use a legitimate source and
provide a link.
c.(40 points) Say that the Philippines economy becomes more open to trade when the
government lifts various import bans, quotas, and tariffs. Depict and explain what happens
to
domestic saving
domestic investment demand and quantity of domestic investment spending
net capital outflow
net exports demand and quantity of net exports
real exchange rate
nominal exchange rate
Make sure you answer the following questions in your explanation:
Is the Philippines a net lender or net borrower in the market for loanable funds?
6
According to your graphs, what (if anything) happens to the Philippines net exports?
Did the Philippine peso appreciate, depreciate, or stay the same?
Depict this scenario on the same graphs from part (b).

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