ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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![**QUESTION 6**
Imagine that Neverland decided to re-establish links to the rest of the world and is now a small open economy. Its economy can be described by the following consumption and investment curves:
\[ C^d(r) = 5000 - 1000r + 0.25Y \]
\[ I^d(r) = 500 - 1800r + 0.2Y \]
Its output is \( Y = 13000 \) and government spending is \( G = 1800 \). The world interest rate is 5%. Which of the following statements are true?
- a. Neverland runs a current account deficit
- b. Neverland runs a current account surplus
- c. There is insufficient information to answer this question](https://content.bartleby.com/qna-images/question/31f97948-18a5-4c2c-8f18-17922ae1d8a0/f0901ba3-2528-4445-bd73-23a0e95d0fd9/ko6jso8_processed.png)
Transcribed Image Text:**QUESTION 6**
Imagine that Neverland decided to re-establish links to the rest of the world and is now a small open economy. Its economy can be described by the following consumption and investment curves:
\[ C^d(r) = 5000 - 1000r + 0.25Y \]
\[ I^d(r) = 500 - 1800r + 0.2Y \]
Its output is \( Y = 13000 \) and government spending is \( G = 1800 \). The world interest rate is 5%. Which of the following statements are true?
- a. Neverland runs a current account deficit
- b. Neverland runs a current account surplus
- c. There is insufficient information to answer this question
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