Output, Y = 1,000, Taxes, T 200 Government purchases, G = 275 Yar 1.500 Tror - 300: Gror 300. equilibrium interest rate in the international capital markat?O (Enter your response as a decimal rounded to three places.) aquilibrium values of national saving, investment, and the current account balance in each country? national saving =I Investment =O current account balance =O ational saving =O vestment = urrent account balance =O
Output, Y = 1,000, Taxes, T 200 Government purchases, G = 275 Yar 1.500 Tror - 300: Gror 300. equilibrium interest rate in the international capital markat?O (Enter your response as a decimal rounded to three places.) aquilibrium values of national saving, investment, and the current account balance in each country? national saving =I Investment =O current account balance =O ational saving =O vestment = urrent account balance =O
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Question
9
Transcribed Image Text:Consider two large open economies, the home economy and the foreign economy. In both countries the following relationships hold:
Domestic
Foreign
c°For = 480 + 0.4(YFor - TEod - 300":
Pror = 225 - 300".
YFor= 1,500
TFor= 300:
Gror = 300.
Desired consumption, C" = 320 + 0.4(Y - T) - 200r":
Desired investment, A = 150 - 200
Output, Y = 1,000;
Taxes, T = 200;
Government purchases, G = 275
a. What is the equilibrium interest rate in the international capital market? (Enter your response as a decimal rounded to three places.)
What are the equilibrium values of: national saving, investment, and the current account balance in each country?
Domestic national saving =
Domestic investment =
Domestic current account balance =
Foreign national saving =
Foreign investment =O
Foreign current account balance =|
b. Suppose that in the home country govemment purchases increase by 50 to 325. Taxes also increase by 50 to keep the deficit from growing. What is the new equilibrium interest rate in the international capital market? (Enter your response as a decimal rounded to three places.)
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