{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Principles of Economics- Mankiw (5th) 658

Principles of Economics- Mankiw (5th) 658 - 680 PA R T E L...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
680 PART ELEVEN THE MACROECONOMICS OF OPEN ECONOMIES economy. The preceding chapter introduced some of the key macroeconomic vari- ables that describe an economy’s relationship with other economies—including net exports, net foreign investment, and the real and nominal exchange rates. This chapter develops a model that shows what forces determine these variables and how these variables are related to one another. To develop this macroeconomic model of an open economy, we build on our previous analysis in two important ways. First, the model takes the economy’s GDP as given. We assume that the economy’s output of goods and services, as measured by real GDP, is determined by the supplies of the factors of production and by the available production technology that turns these inputs into output. Second, the model takes the economy’s price level as given. We assume the price level adjusts to bring the supply and demand for money into balance. In other
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern