Assume that an open economy with a floating exchange rate is described by the equations: C = 0.75(Y-T) T= 2000 I= 2000 -250r G= 3000 NX= 1500 – 250e (M/P)d = 0.4Y – 550r M= 2000 S-I= 600 – 250r P= 2 r* = 2 a. Derive the equation for the IS* curve. b. Derive the equation for the LM curve. c. Solve for Y

Assume that an open economy with a floating exchange rate is described by the equations: C = 0.75(Y-T) T= 2000 I= 2000 -250r G= 3000 NX= 1500 – 250e (M/P)d = 0.4Y – 550r M= 2000 S-I= 600 – 250r P= 2 r* = 2 a. Derive the equation for the IS* curve. b. Derive the equation for the LM curve. c. Solve for Y

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter34: International Finance

Section: Chapter Questions

Problem 10QP

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Assume that an open economy with a floating exchange rate is described by the equations:C = 0.75(Y-T)T= 2000I= 2000 -250rG= 3000NX= 1500 – 250e(M/P)d = 0.4Y – 550rM= 2000S-I= 600 – 250rP= 2r* = 2a. Derive the equation for the IS* curve. b. Derive the equation for the LM curve. c. Solve for NX and e.
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