Suppose a large open economy with perfect capital mobility

Assignment Help Macroeconomics

Reference no: EM13372771

Suppose a large open economy with perfect capital mobility has a real interest rate that equates national saving and desired investment that is above the world real interest rate. Now suppose that the country undertakes a significant fiscal contraction, reducing govt. purchases by $100 billion and increasing tax revenues by $100 billion through a higher effective corporate tax rate. Show the effects of this fiscal contraction on real interest rate, desired saving, desired investment, and the net export balance.

Reference no: EM13372771

Questions Cloud

A the publics preference is to hold their money as half : a. the publics preference is to hold their money as half cash half demand deposit. reserve requirement is 25. determine

1 dr falk is a dentist who performs two basic procedures : 1. dr. falk is a dentist who performs two basic procedures filling cavities and whitening teeth. falk charges 50 per

Suppose that c a by where c consumption a consumption : suppose that c a by where c consumption a consumption at zero income b slope and y income.a. are c and y

1 why do economists pay little attention to the algebraic : 1. why do economists pay little attention to the algebraic sign of the elasticity of demand for a good with respect to

Suppose a large open economy with perfect capital mobility : suppose a large open economy with perfect capital mobility has a real interest rate that equates national saving and

You manage gofer delivery service you rent a truck for 10 : you manage gofer delivery service. you rent a truck for 10 per day and each delivery takes an hour of labor time. the

Suppose a consumer has 600 to spend on two goods good x and : suppose a consumer has 600 to spend on two goods good x and good y. the price of good x is given by px 20. the price

Indifference theory can explain all rational choices and : indifference theory can explain all rational choices and behavior.try the theoryout on this situation. suppose the only

With a us marginal propensity to consume assumed at 12 what : with a u.s. marginal propensity to consume assumed at 12 what will happen to the following with the neoclassical model

User Account

All Pages