Consider a small open economy with marginal propensity to save 0.2 and marginal propensity to import 0.1. Suppose Investment is independent of the level of output (Y) and real exchange rate is 1. Suppose autonomous Investment increases by 5 million dollars: The multiplier for this economy is 3.33 and equilibrium output would increase by 16.67 million dollars. 2) The multiplier for this economy is 10 and equilibrium output would decrease by 50 million dollars 3) Equilibrium output would decrease by 16.67 million dollars and net exports would fall by 1.67 million dollars Equilibrium output would increase by 16.67 million dollars and net exports would increase by 1.67 million dollars 5) The multiplier for this economy is 3.33 and net exports would fall by 1.67 million dollars 6) more than one answer is correct

Consider a small open economy with marginal propensity to save 0.2 and marginal propensity to import 0.1. Suppose Investment is independent of the level of output (Y) and real exchange rate is 1. Suppose autonomous Investment increases by 5 million dollars: The multiplier for this economy is 3.33 and equilibrium output would increase by 16.67 million dollars. 2) The multiplier for this economy is 10 and equilibrium output would decrease by 50 million dollars 3) Equilibrium output would decrease by 16.67 million dollars and net exports would fall by 1.67 million dollars Equilibrium output would increase by 16.67 million dollars and net exports would increase by 1.67 million dollars 5) The multiplier for this economy is 3.33 and net exports would fall by 1.67 million dollars 6) more than one answer is correct

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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answer 5.3 & 5.4
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