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In the short run, Swedeway's output and real exchange rate are now given by Y = 493.33; e = 12.4 %3D Y = 495.00; e = 26.6 Y = 496.67; e = 7.83. Y = 496.00; e = 12.1

In the short run, Swedeway's output and real exchange rate are now given by Y = 493.33; e = 12.4 %3D Y = 495.00; e = 26.6 Y = 496.67; e = 7.83. Y = 496.00; e = 12.1

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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z=5 Suppose desired consumption C", investment, 1", net exports, NX, and the demand for monetary assets, M", for the small open economy of Swedeway can be represented as Cd = 100 + 0.6Y %3D Id = 80 – 400r Md = 0.5Y- 0.3(r + n°) + z NX = 200 – 0.3Y – 10e %3D where Y denotes GDP, r'denotes the domestic real interest rate,eis the real exchange rate andPis the domestic price level. Swedeway operates a flexible nominal exchange rate regime. Government spending is given byG: expected inflation is T° rFor = 0. 03and the foreign price level isPFor = 1. The full employment level 100, the money supply isM = 100and 0.02. The foreign real interest rate is of output is Y 500. In the short run, Swedeway's output and real exchange rate are now given by Y = 493.33; e = = 12.4 Y = 495.00; e = 26.6 Y = 496.67; e = 7.83. Y = 496.00; e = 12.1
Transcribed Image Text:z=5 Suppose desired consumption C", investment, 1", net exports, NX, and the demand for monetary assets, M", for the small open economy of Swedeway can be represented as Cd = 100 + 0.6Y %3D Id = 80 – 400r Md = 0.5Y- 0.3(r + n°) + z NX = 200 – 0.3Y – 10e %3D where Y denotes GDP, r'denotes the domestic real interest rate,eis the real exchange rate andPis the domestic price level. Swedeway operates a flexible nominal exchange rate regime. Government spending is given byG: expected inflation is T° rFor = 0. 03and the foreign price level isPFor = 1. The full employment level 100, the money supply isM = 100and 0.02. The foreign real interest rate is of output is Y 500. In the short run, Swedeway's output and real exchange rate are now given by Y = 493.33; e = = 12.4 Y = 495.00; e = 26.6 Y = 496.67; e = 7.83. Y = 496.00; e = 12.1
What is the change in net exports, ANX, in the short run? ANX = -2,50 %3D ANX = –2.67 %3D ANX = –1.60 ANX = –1,67 In the new GE, Swedeway's domestic price level and real exchange rate are given by P = 0.490; e = 26.0 P = 0.392; e = 11.8 P = 0.649; e = 12.0 P = 0.395; e = 7.60 In the new GE, the nominal exchange rate, enom, is given by епот — 53.0 enom = = 19.3 епот — 30.1 е пот = 18.5
Transcribed Image Text:What is the change in net exports, ANX, in the short run? ANX = -2,50 %3D ANX = –2.67 %3D ANX = –1.60 ANX = –1,67 In the new GE, Swedeway's domestic price level and real exchange rate are given by P = 0.490; e = 26.0 P = 0.392; e = 11.8 P = 0.649; e = 12.0 P = 0.395; e = 7.60 In the new GE, the nominal exchange rate, enom, is given by епот — 53.0 enom = = 19.3 епот — 30.1 е пот = 18.5
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