Assume that in a small open economy with full employment, consumption depends only on disposable income. National saving is 200, investment is given by /= 400-26 r, where r is the real interest rate in percent, and the world interest rate is 5 percent. a. If government spending rises by 100, does investment function change? No, investment function doesn't change change in government spending? 270 b. Does the trade balance change if G rises by 100? Yes, the trade balance decreases change, enter 0) -80 c. Does net capital outflow change if G rises by 100? Click for List change, enter 0)? Number What is the level of investment after the If it changes, how much is the change? (If no If it changes, how much is the change (If no d. What happens to the real exchange rate as a result of the change in G? Click for List

Assume that in a small open economy with full employment, consumption depends only on disposable income. National saving is 200, investment is given by /= 400-26 r, where r is the real interest rate in percent, and the world interest rate is 5 percent. a. If government spending rises by 100, does investment function change? No, investment function doesn't change change in government spending? 270 b. Does the trade balance change if G rises by 100? Yes, the trade balance decreases change, enter 0) -80 c. Does net capital outflow change if G rises by 100? Click for List change, enter 0)? Number What is the level of investment after the If it changes, how much is the change? (If no If it changes, how much is the change (If no d. What happens to the real exchange rate as a result of the change in G? Click for List

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume that in a small open economy with full employment, consumption depends only on disposable
income. National saving is 200, investment is given by /= 400 - 26 r, where r is the real interest rate in
percent, and the world interest rate is 5 percent.
a. If government spending rises by 100, does investment function change?
No, investment function doesn't change
change in government spending? 270
b. Does the trade balance change if G rises by 100?
Yes, the trade balance decreases
change, enter 0) -80
c. Does net capital outflow change if G rises by 100?
Click for List
change, enter 0)? Number
What is the level of investment after the
If it changes, how much is the change? (If no
If it changes, how much is the change (If no
d. What happens to the real exchange rate as a result of the change in G?
Click for List

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