A small open economy is described by the following equations: C= 50 + 0.75(Y – T) |= 200 -20r NX = 200 - 50e M/P = Y – 40r G = 200 T= 200 M = 3,000 P= 3 * =5 The equilibrium exchange rate is (please enter your answer in numerical form with no decimal space, comma, or percentage), the equilibrium income is (please enter your answer in numerical form with no decimal space, comma, or dollar sign), and net exports is (please enter your answer in numerical form with no decimal space, comma, or dollar sign). If the government increases its spending by 50, assuming a floating exchange rate, the equilibrium exchange rate is (please enter your answer in numerical form with no decimal space, comma, or percentage), the equilibrium income is (please enter your answer in numerical form with no decimal space, comma, or dollar sign), and net exports is (please enter your answer in numerical form with no decimal space, comma, or dollar sign). If the government increases its spending by 50, assuming a fixed exchange rate, the equilibrium income is (please enter your answer in numerical form with no decimal space, comma, or dollar sign), and the money supply is (please enter your answer in numerical form with no decimal space, comma, or dollar sign).

Using the data given in Table 1, compute the net exports. Briefly discuss your result and indicate whether there is a trade surplus or a trade deficit in the current account.

Consider a world with only two countries (i.e., two large open economies), the home country and the foreign country. In the home country the following relationships hold: { refer to image } b) Suppose that in the home country the desired investment increases by 100, that is, I^d = 400−100r^w. What is the world equilibrium interest rate? What are the equilibrium values of consumption, national saving, investment, and the current account balance in each country?

We have the following data for a hypothetical open economy: GNP = $10,000 Consumption (C) = $8,000 Investment (I) = $1,200 Government Purchases (G) = $1,600 What is the value of the current account balance? $. (Enter your answer as an integer. Include a minus sign if necessary).

Exchange Rate Regime a. Do you agree with the following statements? Explain your responses briefly by using relevant open economy models/equations. i) In the Short Run, a flexible exchange rate regime seems to be less attractive than a fixed exchange rate regime ii) In the Medium Run, the economy with a flexible exchange rate regime will generate higher levels of output compared to when it operates under fixed exchange rate regime b. Consider an open economy with a flexible exchange rate. Suppose there is a 10% increase in the money stock and assume that it increases the price level by the same percentage in the medium run. If the real exchange rate and the foreign price level are unchanged in the medium run, what must happen to the nominal exchange rate in the medium run?

National Saving - Investment = X - IM A country whose National Saving is greater than its Investment will experience a Trade deficit (IM > X) Balanced trade (IM – X) = 0 O Trade surplus (X > IM)

A country has been experiencing a persistent deficit in its current account balance due to high levels of imports compared to exports, along with significant outflows of income payments and transfers. To address this issue, the government is considering implementing a range of policies, including devaluation of the currency, imposition of tariffs, and promotion of export industries. The goal is to correct the balance of payments imbalance and improve the country's international financial position. The question is: In this scenario, the primary objective of the government's policies is to: A) Increase the country's reliance on imports B) Decrease foreign investment in the country C) Correct the balance of payments deficit D) Eliminate all forms of international trade

Suppose that Argentina's dollar-denominated external assets and liabilities are $10 billion and $100 billion, respectively, and its Argentine peso-denominated external assets are 70 billion pesos (P) and peso-denominated external liabilities are 50 billion pesos (P). Suppose further that Argentina fixes its exchange rate at P1.5 = $US1.   a) What is the peso value of Argentina's total external wealth? Is it a net debtor or creditor?   b) Suppose that Argentina changes its exchange rate to P2.3 = $US1. How does the external wealth of Argentina change when this occurs?

If the U.S. Dollar appreciates, foreigners will find American goods more expensive because they have to spend less for those goods in USD, meaning with higher prices, the number of U.S. goods being exported will likely drop and leads to a reduction in the Gross Domestic Product (GDP). True or False

The table below shows hypothetical prices of a tall Starbucks latte in countries around the world. Using the data, and the fact that a latte costs $3 in the United States, calculate how much a country's currency is under- or overvalued according to purchasing power. First, calculate the implied exchange rate for each country. Next, calculate the "latte index" for each country using the Big Mac index formula from the chapter. Instructions: Round your answers to two decimal places. Country Thailand Argentina United Kingdom Japan Price 60 baht 15 peso (s) 2 pound (s) 450 yen Official exchange rate 30 baht/dollar. 6 pesos/dollar 0.5 pounds/dollar se yen/dollar Implied exchange rate if PPP holds baht/dollar pesos/dollar pounds/dollar yen/dollar 20.67 4.00 .67 145.00 Cost of U.S. latte *% 20.50 42.86 40.30 % % 27