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Macroeconomics 5th Edition by Olivier Blanchard
Edition 5ISBN: 978-0132159869Macroeconomics 5th Edition by Olivier Blanchard
Edition 5ISBN: 978-0132159869 Exercise 5
Net exports and foreign demand
a. Suppose there is an increase in foreign output. Show the effect on the domestic economy (i.e., replicate Figure 19-4). What is the effect on domestic output On domestic net exports
b. If the interest rate remains constant, what will happen to domestic investment If taxes are fixed, what will happen to the domestic budget deficit
c. Using equation (19.5), what must happen to private saving Explain.
d. Foreign output does not appear in equation (19.5), yet it evidently affects net exports. Explain how this is possible.
Equation (19.5):
a. Suppose there is an increase in foreign output. Show the effect on the domestic economy (i.e., replicate Figure 19-4). What is the effect on domestic output On domestic net exports
b. If the interest rate remains constant, what will happen to domestic investment If taxes are fixed, what will happen to the domestic budget deficit
c. Using equation (19.5), what must happen to private saving Explain.
d. Foreign output does not appear in equation (19.5), yet it evidently affects net exports. Explain how this is possible.
Equation (19.5):
Explanation
Verified
Verified
Net exports is difference between the ex...
Macroeconomics 5th Edition by Olivier Blanchard
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