What will national saving and investment be for economy

Reference no: EM13209398

Consider the following model of a small, open economy:
Ys=4000
Yd=C+I+G+NX
C= 400+.8 (Y-T)
I= 800-5000r
NXd= 800-400E
a. Assuming that the world's real interest rate is 8% (rw* = .08), what will national saving (S) and investment (I) be for this economy?

b. What are the equilibrium values of net exports (NX) and the real exchange rate?

c. What are the equilibrium values of net exports and the real exchange rate if the world's real interest falls to 6%, all else equal?

d. What are the equilibrium values of net exports and the real exchange rate if the world's real interest rate is 8%, but domestic government purchases (G) are reduced to 100, all else equal

Reference no: EM13209398

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