420worksheet5 - Y = C I G NX Y = 2,000 G = 400 T = 200 C =...

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ECON 420 – 002 & 004 Worksheet 5 1. In a closed economy, the following functions hold: C = 200 + 0.8(Y-T) I = 200 -10r G = 500 Y = 2000 T = 500 a. What is the equilibrium interest rate? b. What is the equilibrium level of Consumption and Investment? 2. Consider an open economy described by the following equations:
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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....
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