In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.
In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.
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C = 40 + 0.8YD
T = 50
I = 60
G = 40
X = 100
M = 50 + 0.05Y
Equilibrium income (Y) = A/(1 - c + m)
= (C - cT + I + G + X - M)/(1 - c + m)
= (40 - 0.8 x 50 + 40 + 60 + 100 - 50)/(1 - 0.8 + 0.05)
= (40 - 40 + 40 + 60 + 100 - 50)/0.25
= 150/0.25
= (150 x 100)/25
= 600
Net export balance NX = X - M - 0.05Y
= 100 - 50 - 0.05 x 600
= 50 - 0.05 x 60
= 50 - 30 = 20
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