section7 - ECON 101B: Section 7 Handout Date: 2/9/11...

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

View Full Document Right Arrow Icon
ECON 101B: Section 7 Handout Date: 2/9/11 Question 1 (continued from last time) The small open economy is described by the following equations: S = 10 + 100 r I = 15 100 r Y = 50 G = 10 r = 3% by $2 billion at each level of the world real interest rate. Repeat part (1) with this new information. 3. ( new ) Suppose the relationship between the real exchange rate and net exports can be represented as NX = 1 : 5 " Compute the real exchange rate before and after the investment increase. 4. ( new ) Supplement your answer with a graph. Question 2 (continued from last time) 1. A large open economy reduces its investment demand. This causes the world real interest rate to a.
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.

This note was uploaded on 10/04/2011 for the course ECON 101b taught by Professor Staff during the Spring '08 term at University of California, Berkeley.

Page1 / 2

section7 - ECON 101B: Section 7 Handout Date: 2/9/11...

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