ECON202midterm2_s06

ECON202midterm2_s06 - ECON 202, SPRING 2006 Malhar Nabar...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 202, SPRING 2006 Malhar Nabar April 14, 2006 MID TERM II Instructions. The maximum score is 100. Please answer all THREE questions. Show all your work. Simply writing down an answer (even if it happens to be the correct one) without adequate demonstration of how you arrived at your answer will not get you full credit. You may use a 1. ( ) Open economy IS-LM model (Mundell-Fleming) A small open economy with ±oating exchange rates is described by the following equations: Interest rate: r = r = 0 : 05 (where r is the world interest rate) Consumption: C = 100 + 0 : 8( Y T ) 6000 r Investment: I = 150 1000 r Net Exports: NX = 1000 & 0 : 5 Y 250 (where is the real exchange rate) Government expenditure: G = 250 Tax revenue: T = 250 Demand for Real Money Balances: L ( r; Y ) = 0 : 5 Y 2000 r Supply of Real Money Balances: M P = 400 Potential output: Y = 1200 (i.e. the output level associated with the natural rate of unemploy-
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

ECON202midterm2_s06 - ECON 202, SPRING 2006 Malhar Nabar...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online