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

How we can determine the macroeconomic performance, Macroeconomic performan...

Macroeconomic performance The UK's future macroeconomic performance must be judged on how average living standards improve, inflation is kept under control, economy grows and

Trading nation is impacted, In a ___________ exchange rate system each trad...

In a ___________ exchange rate system each trading nation is impacted directly by the supply and demand for their currency. A) Fixed B) Dirty C) Floating D) Clean

Illustrate an example of consumer price index, Illustrate an example of Con...

Illustrate an example of Consumer Price Index For instance, if we spend twice as much on apples as on pears, apples would have twice the weight in basket. The precise details o

Theory of aggregate deman, unplanned changes in inventory are counted as in...

unplanned changes in inventory are counted as inventory spending by firms.say true or false and justify

Financial development in economy, Financial Development A well develope...

Financial Development A well developed financial system is very essential for the smooth functioning of any economy. One set of important statistical indicators that is used to

Market labor supply, Suppose that the market labor supply and labor demand ...

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. If a minimum wage is set at $4.00 (W = 4), then how all step by step.

What is productivity or average product, What is productivity? Produ...

What is productivity? Productivity or average product (AP): It is output person which is output divided through number of workers AP= Q/L. There labour Productivity can

International trade, factor contribute long run trend of term of trade in d...

factor contribute long run trend of term of trade in developing country

Introduce about the open-economy macroeconomics shortly, Introduce about th...

Introduce about the open-economy macroeconomics shortly. The Open Economy: a. One of the major concerns introduced through open-economy macroeconomics is the exchange rat

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