Review_Questions_Chapters_17__18 - ECMC61 International...

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

View Full Document Right Arrow Icon
ECMC61 – International Economics: Finance Chapter 17 – Output and the Exchange Rate in the Short Run Question 1: Problems #2. (Short run analysis only) Question 2: Problems #4. Question 3: Problems #8 (Short run analysis only) Question 4: A tax break will increase output and deteriorate the current account in the short run. Discuss. Question 5: A small open economy can be described by the following equations: DD equation: Y = 27900 + G – 800P + 500E AA equation: Y = 3000 + 10 + 1000E e – 500E Long-run output level: Y FE = 9K 1/3 L 2/3 Note: Exchange rate is quoted as E DC/FC . Keep your answer to 4 decimal points . a) This economy has 64000 units of capital and 1000 workers. In addition, the level of (nominal) money supply is 26250 while the level of government spending is 10% of the country’s long-run level of output. Compute the long-run equilibrium values of DC/FC exchange rate if the expected value of DC (E e ) is 28 DC per FC. b)
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 12/21/2011 for the course ECONOMICS ECMC61 taught by Professor Dr.irisau during the Fall '11 term at University of Toronto- Toronto.

Page1 / 2

Review_Questions_Chapters_17__18 - ECMC61 International...

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