Consider the following model for a small open economy. Using this model, and rounding to 3 decimal places, please answer all questions to this CML Y = 750 – s - 1000i + 5e# (1) IS Equation i = 0.5 (1+ s) + 0.001Y – 0.0054M (2) LM Equation i = ij = 0.05 (3) BP=0 locus Let foreign prices be fixed at Pf = 1 and the nominal exchange rate e be flexible. Question 1: Assuming that this is a classical economy with full flexible domestic prices and output is fixed at the full employment level Y=Yp = 2000. Also assume that there is no COVID (s-o) and the benchmark for nominal money supply is M-I- s0n Solve for P.

Consider the following model for a small open economy. Using this model, and rounding to 3 decimal places, please answer all questions to this CML Y = 750 – s - 1000i + 5e# (1) IS Equation i = 0.5 (1+ s) + 0.001Y – 0.0054M (2) LM Equation i = ij = 0.05 (3) BP=0 locus Let foreign prices be fixed at Pf = 1 and the nominal exchange rate e be flexible. Question 1: Assuming that this is a classical economy with full flexible domestic prices and output is fixed at the full employment level Y=Yp = 2000. Also assume that there is no COVID (s-o) and the benchmark for nominal money supply is M-I- s0n Solve for P.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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