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Consider an economy where C=200+0.25(Y-T) I=150+0.25Y-1000i G=250,T=200 (M/P)d=2Y-8000i (M/P)s =1600 X = 0.3Y*, IM =0.2Y, ε (real exchange rate) = 2, Y* is foreign output (Y*=900) 2
a. Calculate the multiplier if the economy is closed and the multiplier if the economy opens up. Explain the economic intuition why two are different with 3-5 sentences.
b. Solve for the equilibrium level of income (Y) for the open economy (Yopen) and calculate the trade balance (NX).
c. Solve for the equilibrium level of interest rate for the open economy (iopen).
d. If government follows an expansionary fiscal policy and G changes by 60, calculate the change in Y for both the closed economy (?Yclosed) the open economy (?Yopen). Assume no change in the foreign output (Y*), Calculate the new trade balance.
e. If this economy has flexible exchange rate regime, how would the exchange rate respond to a fiscal expansion policey? Appreciation or Depreciation? Explain why.
Provided an appropriate analysis of the firm's global operations and integrating information at the regional and national levels - Examined how well the firm has operated in the past.
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In a perfectly competitive market for coal, consumers’ benefit function from consuming tons of coal , is given by B(Q)= -.25Q^2+240Q In addition, the coal producer has a cost function given by: ?C(Q) =.1Q^2 +2Q. Suppose the government imposes an ad v..
you estimate that the price elasticity of demand for clinic visit is -0.25. you anticipate that a major insurer will increase the copayment from $20 to $25. This insurer covers 40,000 of your patients, and those patients average 2.5 visits per y..
In her economics course, Nancy has two exams. Her overall score for the course will be the maximum of her scores on the two exams. Nancy decides to spend a total of 400 minutes studying for these exams. On a graph with x1 on the horizontal axis and x..
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Calculate the present worth of a 4.5%, $5,000 bond with interest paid semiannually. The bond matures in 10 years, and the investor wants to make 8% per year compounded quarterly on the investment.
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