A small open economy (SOE) is characterized by the following: Y= 500 G= 100 S= 100 + 1000r (National Savings) I = 150 − 1000r r= 0.03 a) Find: consumption, national saving, investment, net exports.
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- Aggregate expenditure in an open economy equals a) C + I + G + S - M b) C + I + G + T - M c) C + I + G + (X - M) d) C + I + G + (M - X)Consider a small open economy. Assume that GDP (Y) is 5000. Consumption (C) is given by the equation C = 1000 + 0.25(Y-T). Investment (I) is given by the equation I = 1500 – 50r, where r is the real interest rate in percentage points. The world interest rate is actually 5% (r*=5). Taxes (T) are 1000 and government spending (G) is 1500. Net exports are given by the equation NX=500-250Ɛ. Suppose T and G at their initial values (1000 and 1500). Suppose there is a shift in the global supply of funds, so that the new world interest rate becomes 3%. Compute the equilibrium real exchange rate. Represent the equilibrium graphically and interpret your result.For an open economy, which of the following expressions represents private saving (S)?investment plus tax revenues less government expenditure plus net exports, I + T – G + NXI + T – G – NXI + G + NXG – T + NX – Inone of the above
- Economics Consider the following data for country B, an open economy, for this year: Y = $14 trillion C = $6 trillion G = $2 trillion NX = $3 trillion T = $4 trillion TR = $0.5 trillion a) Find country B’s domestic investment. b) Find country B’s private saving. c) Find country B’s public saving. d) Find country A’s national saving. e) Find country B’s net foreign investmentIn an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 billion, and net capital outflow equals $225 billion. What is national saving?In an open economy, gross domestic product equals $2,460 billion, consumption expenditure equals $1,435 billion, government expenditure equals $325 billion, investment equals $560 billion, and net capital outflow equals $375 billion. What is national saving? $1,260 billion $2,135 billion $935 billion $1,900 billion
- In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis. Recall the components that make up GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C = consumption, I = investment, G = government purchases, X = exports, M = imports, and NX = net exports: Y = Also, national saving is the income of the nation that is left after paying for Therefore, national saving (S) is defined as: Rearranging the previous equation and solving for Y yields Y = . Plugging this into the original equation showing the various components of GDP results in the following…Spain operates in the world economy(open economy). Its economy can be described by the following consumption and investment curves: C(r) = 5000-1000r+0.25Y, I(r) = 500-1800r+0.2Y. Its output is Y = 13250 and the government spending is G = 8000. The world Interest rate is 5%. Before joining the world economy, Spain’s closed economy output is 13000. Question: What is Spain’s current account balance?how do you solve national saving
- Country A produces GDP according to the following equation: GDP = 5√K or can be read as (5 square root of K), and has a capital stock of 10,000. If the country devotes 25% of its GDP to making investment goods, how much is this country investing? Additionally, if 1% of all capital goods depreciate every year, is the country’s GDP increasing, decreasing or remaining constant?In an open economy, if the level of net exports rises, it must be the case thata) there is an increase in saving.b) there is an increase in investment.c) the value of saving less investment must fall.d) none of the above. Why the correct answer is D?We have the following data for a hypothetical open economy: GNP = $12,000 Consumption (C) = $7,500 Investment (1) = $1,400 Government Purchases (G) = $1,200 Tax Collections (T) = $1,400 What is the value of private savings plus public savings? $ integer. Include a minus sign if necessary.) (Enter your answer as an