Assume that the following equations characterize a small open economy: Y= 5,000 C-0.5 (Y - 7) 1-2,000 - 100r NX - 500 - 500E -25 G-1,500 T-1.000. a. Solve these equations for the equilibrium values of consumption, investment, net exports, net capital outflow, and the real exchange rate. b. Does this economy run a trade surplus or a trade deficit? c. Is this economy a net borrower or a net lender?

Assume that the following equations characterize a small open economy: Y= 5,000 C-0.5 (Y - 7) 1-2,000 - 100r NX - 500 - 500E -25 G-1,500 T-1.000. a. Solve these equations for the equilibrium values of consumption, investment, net exports, net capital outflow, and the real exchange rate. b. Does this economy run a trade surplus or a trade deficit? c. Is this economy a net borrower or a net lender?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 2PA

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