Current Account equilibrium is defined as NX = x₁YW + x2R=m₁Y + m₂R and Capital Account equilibrium as CP = x(i - iW) with Balance of Payments equilibrium being the sum of the two. How can we represent the three conditions of equilibrium (in interest rate and output space), and why are we justified in approximating.

ENGR.ECONOMIC ANALYSIS
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Current Account equilibrium is defined as NX = x₁YW + x2R - m₁Y+ m2R and Capital
Account equilibrium as CP = K(i - iW) with Balance of Payments equilibrium being the sum
of the two. How can we represent the three conditions of equilibrium (in interest rate and
output space), and why are we justified in approximating.
Transcribed Image Text:Current Account equilibrium is defined as NX = x₁YW + x2R - m₁Y+ m2R and Capital Account equilibrium as CP = K(i - iW) with Balance of Payments equilibrium being the sum of the two. How can we represent the three conditions of equilibrium (in interest rate and output space), and why are we justified in approximating.
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