NB: Solve Question A (ii), (iii), and (iv) ### Economic Analysis: A Case Study of Ghana**Given:****Income Identity:**\[ Y = C + I + G + NX \]- $ 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)#### (a) Solve for:**(i) The National Savings**$ S = Y - C - G $To find $ C $, substitute the values:\[ C = 250 + 0.75(Y - T) \]\[ C = 250 + 0.75(6,000 - 1,000) \]\[ C = 250 + 0.75(5,000) \]\[ C = 250 + 3,750 \]\[ C = 4,000 \]Now, compute the National Savings $ S $:\[ S = Y - C - G \]\[ S = 6,000 - 4,000 - 1,200 \]\[ S = 800 \]**(ii) The Trade Balance**\[ NX = 400 - 400e \]Given $ e $ is not defined numerically, the trade balance in terms of $ e $ is:\[ NX = 400 - 400e \]**(iii) The Equilibrium Exchange Rate**In equilibrium, savings equals investment plus net exports:\[ S = I + NX \]Given $ S = 800 $:\[ 800 = (1,000 - 100r) + (400 - 400e) \]Plug in $ r = 5 $:\[ 800 = (1,000 - 500) + (400 - 400e) \]\[ 800 = 500 + 400 - 400e \]\[ 800 = 900 - 400e \]\[ 400e = 100 \]\[ e = 0.25 \]**(iv) Based on your answer in (iii

The Given Informations are Y=C+I+G+NX C= 250+0.75(Y-T) Y=6000 G= 1200 T=1000 I= 1000-100r…

(Income Identity) Y = C+I+G+ NX Y = 6,000 G = 1,200 T = 1,000 C = 250+0.75(Y –T) 1 = 1,000 – 100r NX = 400 – 400ɛ r= p* =5 (Income) (Government expenditure) (Тах) (Consumption expenditure function) (Investment function) (Net exports function) (Interest rate) (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?

(Income Identity) Y = C+I+G+ NX Y = 6,000 G = 1,200 T = 1,000 C = 250+0.75(Y –T) 1 = 1,000 – 100r NX = 400 – 400ɛ r= p* =5 (Income) (Government expenditure) (Тах) (Consumption expenditure function) (Investment function) (Net exports function) (Interest rate) (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?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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