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answer all subquestions please Consider an open economy model of the form:
y=C(y)+I(i)+X(e)V(y,e)+GL(y,i)PM=0X(e)+F(i,i)=V(y,e) All functions and variables have their
usual meanings. (a) Determine and provide economic intuition for the signs and magnitudes of
the following Multipliers (Assume the BP curve is upward sloping): i) dY/dM ii) de/dM iii)
di/dM iv) dY/dG v) de/dG vi) di/dG (b) Compare the values of dY/dM and dY/dG when capital
mobility is perfect and use economic intuition to explain why the values differ. (c) Redo Part (b)
above for the following pairs of multipliers: i. de/dM and de/dG ii. di/dM and di/dG

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answer all subquestions please Consider an open economy model of t.pdf

  • 1. answer all subquestions please Consider an open economy model of the form: y=C(y)+I(i)+X(e)V(y,e)+GL(y,i)PM=0X(e)+F(i,i)=V(y,e) All functions and variables have their usual meanings. (a) Determine and provide economic intuition for the signs and magnitudes of the following Multipliers (Assume the BP curve is upward sloping): i) dY/dM ii) de/dM iii) di/dM iv) dY/dG v) de/dG vi) di/dG (b) Compare the values of dY/dM and dY/dG when capital mobility is perfect and use economic intuition to explain why the values differ. (c) Redo Part (b) above for the following pairs of multipliers: i. de/dM and de/dG ii. di/dM and di/dG