Consider the open economy IS/LM model with the following functions:…
Question Answered step-by-step Consider the open economy IS/LM model with the following functions:… Consider the open economy IS/LM model with the following functions: C = 0.5(Y −T), I = 1500 − 250r, NX = 1000 − 250e, L(Y, r) = 0.5Y − 500r (money demand), CF = 500−250r. Taxes, government purchases, the money supply, and price level are T = 1000, G = 1500, M = 1000, and P = 1. Calculate the equilibrium values for GDP Y , the interest rate r, consumption C, investment I, net capital outflow CF, net exports NX, and the exchange rate e.I am confused because I keep getting different answers. Below is the possible answers I have got. Y = 3250, r = 0.1, C = 1250, I = 1250, CF = 250, NX = 0, and e = 1. or Y = 5000, r = 0.2 , C = 2500, I = 1250, CF = 250, NX = 750, and e = 1.5. or both of those could be wrong, so if you could please help me find the correct solution, that would be greatly appreciated it. I have also attached below a screenshot of the question in the form I was asked. Image transcription text3. Consider the open economy IS / LM model with the following functions: 0 = 0.5(Y — T), I = 1500 —2507″, NX = 1000 — 2506, L(Y, 7″) = 0.5Y — 500?” (money demand), CF 2 500 — 2507′.Taxes, government purchases, the money supply, and price level are T = 1000, G = 1500, M = 100… Show more… Show more Business Economics Macroeconomics ECON ECON 101 Share QuestionEmailCopy link Comments (0)
