HW3 - Econ 457 Spring 2010 Problem Set III(Due in class on April 5 2011 Problems from the textbook Chapter 16 1 4 5 7 11 13 15 17 and the following

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Econ 457, Spring 2010 Problem Set III (Due in class on April 5, 2011) Problems from the textbook: Chapter 16 1, 4, 5, 7, 11, 13, 15, 17 and the following: 1. Using the notation from the lecture notes, answer the following questions. You may assume that net labor income from abroad is zero, there are no capital gains on external wealth, and there are no unilateral transfers. a. Express the change in external wealth (∆ W 0) at the end of period 0 as a function of the economy’s trade balance (TB), the real interest rate (a constant, r *), and initial external wealth ( W _1). b. Using (a), write an expression for the stock of external wealth at the end of period 0 ( W 0). This should be written as a function of the economy’s trade balance ( TB 0), the real interest rate, and initial external wealth ( W _1). c. Using (a) and (b), write an expression for the stock of external wealth at the end of period 1 ( W 1).This should be written as a function of the economy’s trade balance (TB)
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This note was uploaded on 08/01/2011 for the course ECON 457 taught by Professor Staff during the Spring '11 term at Iowa State.

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HW3 - Econ 457 Spring 2010 Problem Set III(Due in class on April 5 2011 Problems from the textbook Chapter 16 1 4 5 7 11 13 15 17 and the following

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