World in the cross model, Macroeconomics

Assignment Help:

The rest of the world in the cross model

Imports Im(Y) depends positively on Y in the cross model

In the classical model, imports doesn't depend on Y. The discussion whether imports relies on Y or not is the same as for consumption. Though in the cross model, it's always presumed that when Y increases, consumption will increase by more than imports. This makes sense because C is generally larger than Y. For instance, Assume that C is 1000 whereas Im is 100 and that Y increases by 10%. If C and Im increase by 5% each, C will increase by 50 whereas Im will increases by only 5. 

Net exports NX = X - Im will depend negatively on Y and rest of the world savings SR = Im - X relies positively on Y in cross model. If we want to be explicit about these dependences we write: 

NX(Y) = X - Im(Y)

SR(Y) = Im(Y) - X


Related Discussions:- World in the cross model

Show the investment function in the IS-LM model, Q. Show the investment fun...

Q. Show the investment function in the IS-LM model? The investment function in the IS-LM model Investment was an exogenous variable in cross model owing to the fact that

Homework Help, An unanticipated demand-pulled inflation would normally lead...

An unanticipated demand-pulled inflation would normally lead to all the following problems except?

Ratios, How to find fixed costs for capacity ratio calculating from annual ...

How to find fixed costs for capacity ratio calculating from annual report?

Exchange rate, what are the types of exchange rate

what are the types of exchange rate

Describe the classical model of macroeconomics, Q. Describe the classical m...

Q. Describe the classical model of macroeconomics? 'The classical model' was a term coined by Keynes in the 1930s to signify essentially all the ideas of economics as they appl

Summary of the cross model, Summary of the cross model The below list...

Summary of the cross model The below list summarizes the cross model and associates it to classical model:  Labor Market: Real wages W/P is exogenous in cross model

Financial Crises, #question. BANK Z (@ 10% RR) ASS...

#question. BANK Z (@ 10% RR) ASSETS LIABILITIES RR: K200,000 Deposits : K2,000,000 ER : K1,800,000 You are given the above Balance sheet for Bank Z as

Poisson distribution, In a Poisson distribution U=4. A) What is the probabi...

In a Poisson distribution U=4. A) What is the probability that X=2? B) What is the probability that X is 2?

Monopoly model, Use the monopoly model to explain how providers are able to...

Use the monopoly model to explain how providers are able to charge different groups of patients different prices.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd