C= 10 + 0.9 (Y-T), I=80, G=65, and T=50 Imports and exports are given by: IM...

C= 10 + 0.9 (Y-T), I=80, G=65, and T=50

Imports and exports are given by:

IM =0.3Y and X=0.2Y*

Foreign income (Y*) =1000

Draw representative graphs of the goods market and net-exports. Draw your graphs to illustrate the trade balance at the equilibrium level of output. (10)
What happens to equilibrium output and the trade balance if foreign income increases to 1200? Show the impact of this change on the graphs that you drew in part c. (15)

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Given the following economy: Y = C(Y - T) + I(r) + G C(Y - T)...

Given the following economy: Y = C(Y - T) + I(r) + G C(Y - T) = a + b(Y - T) I(r) = c - dr M/P = L(r,Y) L(r,Y) = eY - fr i. Solve for Y as a function of r, the exogenous variables G and T, and the model's parameters a, b, c, and d. ii. Solve for r as a function of Y, M, P, and the parameters e and f. iii. Derive the aggregate...

Given the following: Y= C + I + G. C= 50 + 0.8Yd I= 160 G=...

Given the following: Y= C + I + G. C= 50 + 0.8Yd I= 160 G= 150, T = 200 Determine the equilibrium level of output (Y). Calculate Yd, C, S. Calculate the expenditure\ tax multiplier. Now suppose that the potential GDP equals 1100, By how much would government spending\ tax need to change to close the gap?

suppose an economy is defined by C= 100+ 0.9 (Y-T), I=220-10r, G=300,T=300 a. find equation for...

suppose an economy is defined by C= 100+ 0.9 (Y-T), I=220-10r, G=300,T=300 a. find equation for IS curve and what is the slope b. if r=6%. what is equilibrium level of income c. if the government switches from lump-sum taxation to an income tax with a constant tax rate what happens to the slope of IS

Y= C + I + G C= 170 + 0.6( Y-T ) where T= 200+0.2Y I=...

Y= C + I + G C= 170 + 0.6( Y-T ) where T= 200+0.2Y I= 100-4r G=350 ( M/p) d= 0.75Y-6r (Ms/P)= 735 1) What is the new equilibrium level of Y and r if the central bank increases money supply by 8%. 2) What is the new equilibrium level of Y and r if government spending is increased to 500 & central bank increases money supply by 8% 3) What is the new equilibrium level of Y and...

1. *Suppose that the economy is described by: Y =C(Y,T)+I(Y,i)+G, with G, T exogenous. (a) Use...

1. *Suppose that the economy is described by: Y =C(Y,T)+I(Y,i)+G, with G, T exogenous. (a) Use the total derivative to derive di/dY (b) What is the sign of this derivative? (c) What does the slope of the line depend on? Explain the intuition. (d) Graph this curve. (e) Use the total derivative to find dY/dG and dY/dT

Y = C + I + G + NX Y = 18,500; G = 4,000; T...

Y = C + I + G + NX Y = 18,500; G = 4,000; T = 2,000 C = 750 + 3/4 (Y - T) I = 1,000 - 50r CF = 750 - 25r NX = 1,825 - 150ϵϵ (a) In this economy solve for consumption, private and public saving, national saving, investment, the trade balance, the net capital outflow (net foreign investment), the real interest rate and the real exchange rate. (b) The demand of funds for...

2. C = 50 + .8YD = 50 + .8(Y – T) I = 150...

2. C = 50 + .8YD = 50 + .8(Y – T) I = 150 G = 200 T = 200 a) Calculate ∆Y if ∆G = 100 (assuming that G could change all by itself). b) Calculate ∆Y if ∆T = 100 (assuming that T could change all by itself). c) Calculate ∆Y for ∆G = ∆T = 100. Show that you could have predicted this result from your answers to parts a and b.

1. If y=C+I where C= 50+.75 Y and I = 50 What is Y, C, and...

1. If y=C+I where C= 50+.75 Y and I = 50 What is Y, C, and the multiplier? What if instead I = 50+.05Y? 2. If Y=C+I+G where C=C - aTo + Y(a - at) and I= lo + by solve for Y, C, I, and the multiplier. Given a = MPC= .75, MPT = .2, MPI = .15, C = 45, To = 40 Io = 60 and G=90 3. What is the present value of $1,000 paid at...

Consider an economy described by the following equations: Y=C+I+G+NX, Y=8,000 G=2,500 T=2,000 C=500 + 0.75(Y−T) I=900−50r...

Consider an economy described by the following equations: Y=C+I+G+NX, Y=8,000 G=2,500 T=2,000 C=500 + 0.75(Y−T) I=900−50r NX=1,500−250ϵ r=r∗=8. In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. 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 find. Now suppose that the world interest rate falls from 8 to 3 percent....

Consider an economy described by the following equations: Y=C+I+G+NX, Y=8,000 G=2,500 T=2,000 C=500 + 0.75(Y−T) I=900−50r...

Consider an economy described by the following equations: Y=C+I+G+NX, Y=8,000 G=2,500 T=2,000 C=500 + 0.75(Y−T) I=900−50r NX=1,500−250ϵ 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 find. c. Now suppose that the world interest rate falls from 8...

Subjects