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- Produce a model based analysis of possible outcomes if Bulgaria was to join the Eurozone.Use models like Mundell Fleming model and Portfolio Balance Model to analyse. Also point out the way in which the variables in the model will represent aspects of the macroeconomic characteristics of Bulgaria and of Croatia.Use diagrams and equations to further develop your pointIt is known that the aggregative economic variables are as follows: Cash demand for speculation : L2 = 100 - 400r The amount of money in circulation = 200 Money demand for transactions and in case: L1 = 0.2Y Savings : S = -110 + 0.2Yd Investment: I = 150 - 600r Tax Tx = 12.5 + 0.25Y Government Expenditure: G = 160 Question : a. calculate the interest rate and national income at the time of general equilibrium? b. How much money is demand for speculation? c. What is the investment volume on balance?The rest of the world claims 100 of debt from the country above. This is a stock variable. The country lends at 4% and borrows at 3%. These are rates of change of stocks. Use this information combined with one of the flow variables describing the country’s international transactions to find the stock of what the world owes this country. Note: no workers worked across the border. No wages flowed in, none flowed out. 125 Is the country from the previous question rich or poor? Does it enjoy the exorbitant privilege? In what important way is this country’s stock and flow of investment are different from the US?
- Consider the following numerical example of the IS-LM model: C = 207+0.45% /= 150+0.21Y-1,099/ G = 396 T= 317 /= 0.06 Derive the IS relation. (Hint: You want an equation with Y on the left side of the equation and everything else on the right.) Y=- (Round your calculations of the intercept and slope terms to two decimal places.)The economy of Zambia evolves according to the equations of the Solow model. It has an investment rate of 0.5, a depreciation rate of 0.3, and the production function Y = AVK where A=9. Assume the capital stock in Year O is Ko = : 25. Project capital, GDP, investment, and depreciation for Years t=0,1,2,...,10 and graph a time plot of all four variables. Be sure to Graph the time path of investment, depreciation, and production functions with time (year) on the horizontal axis Graph all four on a single set of axes Make sure the legend of the graph makes it clear which variable is being graphed Label all axes You must draw your graph in Google Sheets, export it as a png file, and upload it in the upload question below.Sometimes understanding of ISLM becomes clearer when one works through the algebra. This question is designed to promote such understanding. Consider Country A, a closed economy characterized by the following relationships: C = 200 + 0.5YD I = 70- 5r G = T = 100 MD = 500 + Y – 15i where YD, disposable income, is equal to income less taxes, Y-T, and r and i are the real and nominal interest rates expressed in percent. Country A is ruled by a fierce dictator who abhors price movements, so assume prices are not allowed to change in this economy, i.e., that i = r. a) Assume that the Central Bank of Country A sets the nominal interest rate at 4% (r=4) and keeps it at that level. Find consumption, investment and output in equilibrium. b) What money supply is consistent with a real interest rate of 4 percent? Given this money supply, show that saving equals investment. c) Assume Y=600 and plot money demand as a function of the nominal interest rate (put MD on the x-axis and i on the…
- Suppose that the world's current oil reserves is R = 2060 billion barrels. If, on average, the total reserves is decreasing by 15 billion barrels of oil each year, answer the following: A.) Give a linear equation for the total remaining oil reserves, R, in terms of t, the number of years since now. (Be sure to use the correct variable and Preview before you submit.) R= B.) 8 years from now, the total oil reserves will be billions of barrels. C.) If no other oil is deposited into the reserves, the world's oil reserves will be completely depleted (all used up) approximately years from now. (Round your answer to two decimal places.)Sample figure of AD curve has negative slopeQUESTION 29 The DoDo Bird Co., a U.S.-based MNC has applied the following regression model to estimate the sensitivity of its cash flows to exchange rate movements PCF; = ao + bęet + Ut Where the term on the left hand-side is the percentage change in the inflation adjusted cash flows measured in U.S. dollars over period t and eț is the percentage change in the exchange rate of the euro (versus the dollar; number of dollars required to buy one euro) over period t. The regression model estimates a coefficient of bt equal to 0.5. This indicates that: O a. If the euro appreciates by 1%, DoDo Bird's dollar cash flows will decline by .5%. O b. If the euro depreciates by 1%, DoDo Bird's dollar cash flows will increase by 2%. O c. If the euro depreciates by 1%, DoDo Bird's dollar cash flows will decrease by 2%. Od.If the euro depreciates by 1%, DoDo Bird's dollar cash flows will decline by .5%. O e. None of the above QUESTION 30 The 2017 Tax Cuts and Jobs Act: O a. Lowered corporate tax rate…
