Question: Question 4 4. Assuming that Nations 1 and 2 are both large and starting from the equilibrium level of national income and equilibrium in the

Question 4 4. Assuming that Nations 1 and 2 are both

Question 4

4. 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 MPS = 0.20; MPS2 = 0.15; MPM, = 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 c) An autonomous increase in investment of 200 in Nation 2

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