An open economy with absolute mobility of capital is described as follows: consumption function is given as C = 50 + 0, 8(Y-T), where Y is output, andT is net taxes, Investment function is given as I = 20-10i, where I is nominal interest rate. Government spending G 22-4E+0, 3Y where E - nominal exchange rate (price of foreign currency in terms of domestic currency). For one unit of foreign currency, you can get 3 units of domestic currency. The real money supply is M* /P= 50. The demand for real money is described by the following function: L(Y,i) = 0, 5Y-10i. 20, tax Tr = 10, export Ex = 6E+10, import Im %3D Find BP curve, if the economy is initially in the internal and external equilibrium. Write an equation for BP without spaces and 96 signs
An open economy with absolute mobility of capital is described as follows: consumption function is given as C = 50 + 0, 8(Y-T), where Y is output, andT is net taxes, Investment function is given as I = 20-10i, where I is nominal interest rate. Government spending G 22-4E+0, 3Y where E - nominal exchange rate (price of foreign currency in terms of domestic currency). For one unit of foreign currency, you can get 3 units of domestic currency. The real money supply is M* /P= 50. The demand for real money is described by the following function: L(Y,i) = 0, 5Y-10i. 20, tax Tr = 10, export Ex = 6E+10, import Im %3D Find BP curve, if the economy is initially in the internal and external equilibrium. Write an equation for BP without spaces and 96 signs
Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Open-Economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 3QCMC
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