Current Account equilibrium is defined as NX = x₁YW + x2R=m₁Y + m₂R and Capital Account equilibrium as CP = x(i - iW) with Balance of Payments equilibrium being the sum of the two. How can we represent the three conditions of equilibrium (in interest rate and output space), and why are we justified in approximating.

Current Account equilibrium is defined as NX = x₁YW + x2R=m₁Y + m₂R and Capital Account equilibrium as CP = x(i - iW) with Balance of Payments equilibrium being the sum of the two. How can we represent the three conditions of equilibrium (in interest rate and output space), and why are we justified in approximating.

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter19: The International Monetary System: Order Or Disorder

Section: Chapter Questions

Problem 8DQ

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