Question

Graphically illustrate the equilibrium of an open economy. Discuss also the off-the equilibrium situations condition as...

Graphically illustrate the equilibrium of an open economy. Discuss also the off-the equilibrium situations condition as well as the equilibrium.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sol :

Equilibrium in the open economy is the situation where Quantity demanded and quantity supplied are equal to each other at equilibrium price and equilibrium quantity.

It is the point where Market Demand is equal tot eh Market supply of the commodity. (I.e Point E ) in the diagram given below. off equilibrium is the situation of excess supply or excess demand means where either demand is in excess or supply.

These situation will lead to increase or decrease the prices .

So, off equilibrium is the point where demand and supply curve do not intersect each other or are equal to each other.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Graphically illustrate and carefully discuss the impact of substantial inflationary expectations on the market equilibrium conditions...
Graphically illustrate and carefully discuss the impact of substantial inflationary expectations on the market equilibrium conditions (equilibrium quantity and price) of automobiles in the United States.
Consider an open economy operating under fixed exchange rate. using equilibrium condition for the good market,...
Consider an open economy operating under fixed exchange rate. using equilibrium condition for the good market, illustrate in a diagram the short-run effect of an increase in the foreign interest rate on domestic output. Assume that UIP holds and that market participants believe that the exchange rate will stay fixed at its current value in the future. explain why?
Discuss and illustrate graphically how a decrease in saving rate will affect the steadystate level of...
Discuss and illustrate graphically how a decrease in saving rate will affect the steadystate level of capital and output. Also illustrate graphically the transition of capitaland output fromtheir old steady state level to new one. ( Solow Model, please graph (two of them) and explain in details)
4. Suppose that the Fed conducted open market sales. Use the IS-LM model to illustrate graphically...
4. Suppose that the Fed conducted open market sales. Use the IS-LM model to illustrate graphically the impact of the open market sales on output and interest rates. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curves shift; and v. the terminal equilibrium values.
1. Graphically illustrate the Solow model in equilibrium. Label completely. Explain the model. 2. Beginning in...
1. Graphically illustrate the Solow model in equilibrium. Label completely. Explain the model. 2. Beginning in a state of equilibrium in the Solow model, graphically illustrate the destruction from a sizeable portion of the capital stock from a war. In a second graph, graphically illustrate the long-run equilibrium.
Consider an open economy with flexible exchange rates. Let IS stand for the product market equilibrium...
Consider an open economy with flexible exchange rates. Let IS stand for the product market equilibrium condition, LM for the financial market equilibrium condition, and IP for the interest parity condition. a.Write done the equations for IS, LM and IP curve
List and discuss the factors that shift demand. Illustrate graphically. 5.         Define "supply" and the Law...
List and discuss the factors that shift demand. Illustrate graphically. 5.         Define "supply" and the Law of Supply. Why does the supply curve have a positive slope? Discuss these reasons with respect to why a supply curve for olives has a positive slope. 6.         Define, derive and illustrate graphically a market supply curve for olives with only three countries (Spain, Italy and Greece) supplying olives to the market.
1A. Graphically illustrate and carefully explain the impact of a general expectation of rapid inflation on...
1A. Graphically illustrate and carefully explain the impact of a general expectation of rapid inflation on the economy’s equilibrium price and real output in the short-run, assuming that the price level is flexible both upward and downward. 1B. Graphically illustrate and explain the impact of a decrease in aggregate demand on the economy’s equilibrium price and real output, assuming that the economy is currently operating at its full-employment output level and the price level is flexible upward but not downward....
Answer the following Intermediate Macroeconomics questions: a) Suppose that the large open economy conducts a contractionary...
Answer the following Intermediate Macroeconomics questions: a) Suppose that the large open economy conducts a contractionary fiscal policy (i.e., raising taxes and decreasing government spending), illustrate graphically how the small open economy would be impacted. In your graphs, labeled all your graphs correctly and all terminal equilibrium points and values. b) Based on your graphical analysis, explain briefly what happens to the small open economy net exports, investments, national savings.
Graphically illustrate and carefully explain how the U.S. economy could achieve the macroeconomic goals of full...
Graphically illustrate and carefully explain how the U.S. economy could achieve the macroeconomic goals of full employment, strong economic growth, and price level stability in the short-run.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT