Assume That the Following Equations Characterize a Large Open Economy

question 50

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.

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Definitions:

Infantile Amnesia

The inability of adults to recall autobiographical memories from the first few years of life, typically before the age of 3 or 4.

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Memories that can be intentionally recalled, such as facts or events that one has consciously experienced and stored in memory.

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A form of learning occurring at a specific life stage that is rapid and apparently independent of the consequences of behavior.