Question 33 - Question 34: Suppose the balance of payments accounts for Home can be summarized by the following equations (assume there are no other international transactions): Exports of goods and services = 0.2YF-30EFC/DC Imports of goods and services = 0.15YH+20EFC/DC Purchases of domestic assets by foreigners = 250+ 1500(iH - İF) Purchases of foreign assets by domestic residents = 280-2000(İH-İF) Note: The subscripts "H" and "F" stand for Home and Foreign respectively. Also, interest rate is expressed in decimal points (i.e., if i = 0.05, then i = 5%). Question 33 Suppose the current level of output in Home is 6000, which are 750 units less than the level of output in Foreign. In addition, the interest rate at Home is equal to 4%, which is 1 percentage point higher than the interest rate in Foreign. Find the equilibrium level of exchange rate (rounded to 1 decimal point and be sure to show your work). Exchange rate: Question 34 Based on your answer in Question 33, determine whether each of the following statements is true or false. Home runs a current account surplus of 5. Home finds its holding of foreign wealth falls. Home is a net borrower in the world loanable funds market.

Question 33 - Question 34: Suppose the balance of payments accounts for Home can be summarized by the following equations (assume there are no other international transactions): Exports of goods and services = 0.2YF-30EFC/DC Imports of goods and services = 0.15YH+20EFC/DC Purchases of domestic assets by foreigners = 250+ 1500(iH - İF) Purchases of foreign assets by domestic residents = 280-2000(İH-İF) Note: The subscripts "H" and "F" stand for Home and Foreign respectively. Also, interest rate is expressed in decimal points (i.e., if i = 0.05, then i = 5%). Question 33 Suppose the current level of output in Home is 6000, which are 750 units less than the level of output in Foreign. In addition, the interest rate at Home is equal to 4%, which is 1 percentage point higher than the interest rate in Foreign. Find the equilibrium level of exchange rate (rounded to 1 decimal point and be sure to show your work). Exchange rate: Question 34 Based on your answer in Question 33, determine whether each of the following statements is true or false. Home runs a current account surplus of 5. Home finds its holding of foreign wealth falls. Home is a net borrower in the world loanable funds market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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