Assume That the Following Equations Characterize a Large Open Economy

Essay

Assume that the following equations characterize a large open economy:
(1) Y = 5,000
(2) Y = C + I + G + NX
(3) C = 1 / 2 (Y - T)
(4) I = 2,000 - 100r
(5) NX = 500 - 500ε
(6) CF = -100r
(7) CF = NX
(8) G = 1,500
(9) T = 1,000
where NX is net exports, CF is net capital outflow, and ∈ is the real exchange rate.
Solve these equations for the equilibrium values of C, I, NX, CF, r, and ε.