NB: Solve questions B, C and D ### Economic Analysis Problem SetGiven the following economic identities and functions:\[ Y = C + I + G + NX \] (Income Identity)Where:- $ Y = 6,000 $ (Income)- $ G = 1,200 $ (Government expenditure)- $ T = 1,000 $ (Tax)- $ C = 250 + 0.75(Y - T) $ (Consumption expenditure function)- $ I = 1,000 - 100r $ (Investment function)- $ NX = 400 - 400e $ (Net exports function)- $ r = r^* = 5 $ (Interest rate)### Tasks#### (a) Solve for:(i) **The National Saving**(ii) **The Trade Balance**(iii) **The Equilibrium Exchange Rate**(iv) **Based on your answer in (iii), would you describe Ghana as a net borrower or a net lender and why?**#### (b) Explain the effect on investment and trade balance in a small open economy like Ghana if most foreign governments decide to embark on fiscal expansion.#### (c) With the aid of a diagram, explain the effect on saving and trade balance in a small economy like Ghana if the government embarks on fiscal expansion.#### (d) Analyze the effect on interest rate, investment, and trade balance in a small open economy like Ghana if foreign governments in North America, Australia, Asia, and the European Union (EU) embark on expansionary fiscal policy.

Fiscal expansion in foreign countries will increase the world interest rate increase in interest…

(b) Clearly explain the effect on investment and trade balance in a small open economy like Ghana if most foreign governments decide to embark on fiscal expansion. (c) With the aid of a diagram, explain the effect on saving and trade balance in a small economy like Ghana if the government embarks on fiscal expansion. (d) Analyse the effect on interest rate, investment and trade balance in a small open economy like Ghana if foreign governments in North America, Australia, Asia and the European Union (EU) embark on expansionary fiscal policy.

(b) Clearly explain the effect on investment and trade balance in a small open economy like Ghana if most foreign governments decide to embark on fiscal expansion. (c) With the aid of a diagram, explain the effect on saving and trade balance in a small economy like Ghana if the government embarks on fiscal expansion. (d) Analyse the effect on interest rate, investment and trade balance in a small open economy like Ghana if foreign governments in North America, Australia, Asia and the European Union (EU) embark on expansionary fiscal policy.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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