Question

Consider an economy with the given equations. Y = C + I + G + NX...

Consider an economy with the given equations.
Y = C + I + G + NX

Y=$5500

G=$1100

T=$1200

C=$200+0.60(Y−T)

I=1100−50r

NX=1270−1270?

r=r*=5

b. Suppose now that G rises to $1400. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.

Public savings = $_____

National savings = $____

Investment = $_____

Net exports (trade balance) = $____

Exchange rate _____

c. Suppose that the world interest rate rises from 5 to 12 percent. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.

Private savings = $

Public savings = $

National savings = $

Investment = $

Net exports (trade balance) = $

Exchange rate =

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