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An Open Economy Can Be Described by the Following Functions

Question 8

Short Answer

An open economy can be described by the following functions (all figures in millions of dollars):
C = 500 + 0.8Y
I = 600
X = 400
M = 200 + 0.05Y
Calculate equilibrium income and the trade balance.

Correct Answer:

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Y= $5,200; (X-M)= 40...

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