e eecon - 1[INSERT TOPIC HERE[INSERT TOPIC HERE NAME INSTITUTION INSTRUCTOR DATE 1(3(i Given et=110 And we know that The equilibrium is given by y=c i

e eecon - 1[INSERT TOPIC HERE[INSERT TOPIC HERE NAME...

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1 [INSERT TOPIC HERE] [INSERT TOPIC HERE] NAME: INSTITUTION: INSTRUCTOR; DATE: 1. (3) (i) Given et=110 And we know that, The equilibrium is given by ; y=c+i+g+(x-t) therefore, y=1000+0.9y+(700- 40) –(400+0.02(110) -0) - equilibrium y*=1000+0.9y+660-402.2 y*=1257.8+0.9y y*=1257.8/0.1 y*=12578 hence this economy will be under external equilibrium.(no zero current account balance) (ii) With et=100 Value for future expected exchange rate is given by; 6=et^e+1/100 Future expected exchange rate=600.
2 [INSERT TOPIC HERE] (iii)The foreign currency will be expected to appreciate2.(4)Capital is perfectly mobile and price level is fixed
3 [INSERT TOPIC HERE] 3. Filling the blank enturies i I^f e^t+1 e 8 10 98 12.25 6 8 98 100 7 5 700 100 5 5 100 105 5 5 100 100

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