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# I am not sure if I am doing something wrong but I keep getting a different net export for the different countries.

In previous problems the net export for the country was one number and for the other country it was just that number but negative. The countries were running a surplus or deficit of the same amount.

2. (40 points total) We assume that the world consists of two large open economies,
home and foreign.
Home Country Initial Conditions
C = 500 + 0.4(Y-T) -300r&quot;
1 = 200 -300r
Y = 1500
T = 300
G =300
Foreign Country Initial Conditions
Can = 340 + .4(YF - TF) - 200r&quot;
I' = 100 -200r
YF = 1000
TF = 200
GF = 275
a) (5 points) What is the equilibrium interest rate that clears the international goods
market? Show all work.
I* =

b) (5 points) Now calculate the levels of desired savings, investment, and net exports
for each country at this equilibrium world real interest rate.
Home:
Foreign:
NXH=
NXF=

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