Only answer D and E please. Answers to A: are $2000.00 and and O Answers to B: a

Question

Only answer D and E please.

Answers to A: are $2000.00 and and O

Answers to B: are $1850 and -$37.50

Answer to C: is 93.75

Excercise 21 Given the following model of a small open economy b) Due to a appreciation of the currency, export goes down by 50 and Mo rises to 110. Calculate the new income and the new TB - C +c.Y c) By how much would the government need to adjust its level of expenditures to reach a balanced trade? d) What did you just do in terms of the Swan Diagramm? a) Calculate the level of equilibrium e) Instead of the appreciation according to b), the government raises its expenditures by 30. By how much has the currency to devaluate for TB-0, if a devaluation by 2% rises export by 1% and lowers import Moby 5%? income and the trade balance TB for Co = 100 C0.75 m0.15 = 250 Go150 X,400 Mo100

Explanation / Answer

D . Due to appreciation of the currency , the external balance will be in deficit and it could be achieved with lower income or higher interest rate i.e appreciatuon will cause the BP line to shift up .

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