6 z=5Suppose desired consumption C", investment, 1", net exports, NX, and thedemand for monetary assets, M", for the small open economy of Swedeway can berepresented asCd = 100 + 0.6Y%3DId = 80 – 400rMd= 0.5Y- 0.3(r + n°) + zNX = 200 – 0.3Y – 10e%3Dwhere Y denotes GDP, r'denotes the domestic real interest rate,eis the real exchangerate andPis the domestic price level. Swedeway operates a flexible nominalexchange rate regime.Government spending is given byG:expected inflation is T°rFor = 0. 03and the foreign price level isPFor = 1. The full employment level100, the money supply isM = 100and0.02. The foreign real interest rate isof output is Y500.In the short run, Swedeway's output and real exchange rate are now given byY = 493.33; e == 12.4Y = 495.00; e = 26.6Y = 496.67; e = 7.83.Y = 496.00; e = 12.1 What is the change in net exports, ANX, in the short run?ANX = -2,50%3DANX = –2.67%3DANX = –1.60ANX = –1,67In the new GE, Swedeway's domestic price level and real exchange rate are given byP = 0.490; e = 26.0P = 0.392; e = 11.8P = 0.649; e = 12.0P = 0.395; e = 7.60In the new GE, the nominal exchange rate, enom, is given byепот — 53.0enom == 19.3епот — 30.1е пот= 18.5

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Answered: In the short run, Swedeway's output and…

In the short run, Swedeway's output and real exchange rate are now given by Y = 493.33; e = 12.4 %3D Y = 495.00; e = 26.6 Y = 496.67; e = 7.83. Y = 496.00; e = 12.1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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