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- Dear Sir/Madam while studying for my macroeconomics course, I came across this case study that I am struggling with right now. Thank you for your help. Assume the economy is open to capital inflows and outflows and therefore net capital inflow equals imports (IM) minus exports (X). Calculate each of the following. a) X = $125 million IM = $80 million Budget balance = - $200 million I = $350 million Calculate private savings. b) X = $85 million IM = $135 million Budget balance = $100 million Private savings = $250 million Calculate I. c) X = $60 million IM = $95 million Private savings = $325 million I = $300 million Calculate the budget balance. d) Private savings = $325 million I = $400 million Budget balance = $10 million Calculate IM – X.List and briefly discuss the advantages and disadvantages of the IRR rule.Consider a closed economy without a government. If the GDP of the economy is $63,000 and the consumption in the economy is $45,000, the saving rate in the economy is ________. 86 percent 24 percent 57 percent 75 percent
- Answer the following question using well created graphs. Create a closed economy that is in a state of equilibrium at first. Assume that public saving decreases dramatically. Demonstrate how changes in interest rates (and a related variable) may bring the market into equilibrium after illustrating how changes in public savings affect the graph. What is the impact of a tiny open economy (with fixed interest rates) on the analysis?Explain and compare the following terms: Saving intensity and break-even investment intensity.In a closed economy,a change in the capital stock depends on how much is saved, and on depreciation, which negatively affect the capital stock. True or false
- Consider a closed economy. The introduction of new technology and an increase in the precautionary saving motives in the private sector will decrease real interest rates and the equilibrium quantity of saving supplied and demanded in this economy.Answer true, false, or uncertain. Please briefly explain your answer.Assume the economy is open to capital inflows and outflows and therefore net capital inflow equals imports (IM) minus exports (X). Answer each of the following questions. a) X = $60 millionIM = $95 millionPrivate savings = $325 millionI = $300 million Calculate the budget balance. b) Private savings = $325 millionI = $400 millionBudget balance = $10 million Calculate IM − X.At a level of real disposable income of $10,000, suppose consumption is $11,000. Given this information, we know with certainty that saving equals $0. $11,000. -$1,000. $1,000.
- Explain why changes in government spending are viewed as nearly always affecting national saving, while changes in taxes are viewed as having more ambiguous effects on national saving and real interest rates. Why does it matter?Explain how changes in interest rates and rates of return on various investment options will affect the amount of money that businesses are willing to invest to increase output.Assume that GDP ( y) is 6.000. Consumption (C) is given by the equation C= 600 + 06(Y-T). Investment (I )is given by the equation I=2,000- 100r, where r is the real rate of interest in percent. Taxes (T) are government spending (G) is also 500 a. What are the equilibrium values of C, I, and r? b) What are the values of private saving, public saving, and national saving? ·