question archive Question 3 (20 marks) Consider a small open economy with the following information: C = 100+ 0
Subject:EconomicsPrice: Bought3
Question 3 (20 marks) Consider a small open economy with the following information: C = 100+ 0.60 (Y-T) I = 500 - 2,500r NX = 100 - 25€ (M/P)' = Y - 5,000r G = 400 T= 300 M = 5,000 P=4 r* = 5% a. Estimate the equilibrium exchange rate, level of income, and net exports in the economy. (10 marks) Suppose the economy is under a floating exchange rate. Due to the COVID-19 pandemic, the government increases its spending by 100. Estimate the exchange rate, the level of income, net exports and the money supply. (10 marks) b.