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Unformatted text preview: Y = C + I + G + NX Y = 2,000 G = 400 T = 200 C = 500 + 0.75 (Y-T) I = 200-10r NX = 100-100ε r = r * = 4 a. In this economy, solve for national saving, investment, the trade balance, and the equilibrium exchange rate. National Saving: S= Y-C-G = 2000-(500+0.75*(2000-200)-400) S=-250 Investment: I = 200-10*4=160 Equilibrium exchange rate: S-I = NX-250-160=100-100ε-510=-100ε Exchange rate = 5.10 Trade balance = 100-100*5.10=-410...
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This note was uploaded on 11/17/2008 for the course ECON 420 taught by Professor Hill during the Spring '08 term at UNC.
- Spring '08