"The Open Economy — Work It Out: Question 1
Consider an economy with the given equations.
Y = C + I + G + NX
Y=$5000
G=$1050
T=$1200
C=$300+0.60(Y−T)
I=1000−55r
NX=1145−1145
r=r*=5
a. In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.
Private savings = $
Public savings = $
National savings = $
Investment = $
Net exports (trade balance) = $
Exchange rate =
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