In order to bring GDP and national income into accord,
a. add indirect business taxes to national income and we have GDP
b. add depreciation of capital and indirect business taxes to GDP and we have national income
c. subtract depreciation of capital from GDP and we have national income
d. subtract depreciation of capital and proprietor's income from GDP and we have national income
e. subtract depreciation of capital and indirect business taxes from GDP and we have national income
E
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In the open-economy macroeconomic model, if a country's interest rate falls, then its
a. net capital outflow and its net exports rise. b. net capital outflow rises and its net exports fall. c. net capital outflow falls and its net exports rise. d. net capital outflow and its net exports fall.
Suppose the president of country A opens this economy to trade with the rest of the world in 2010. Furthermore, suppose that the investment demand is the same as in 2009. Now, instead of being provided the equilibrium level of SP, we are provided with the SP curve: r =0.025+0.000025Q, where r is still the real interest rate. We are also told that the capital inflow equals $200 billion in 2010. For this part of the problem assumed that the government has a balanced budget in the year 2010. Compute the new equilibrium quantity of LF demanded or supplied, and the equilibrium real interest rate in the year of 2010
What will be an ideal response?