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###### 6. An open economy is described by the following equations C = 1000 + 0.6(Y-T) I 20, 000 200r G 5...

Answer the question (c)

6. An open economy is described by the following equations C = 1000 + 0.6(Y-T) I 20, 000 200r G 5000 T = 5000 MD MS = 60.000 CA = NX = 2000-0.1Y-1000e KA = 5500+ 2(r-r") r"--10 (a) Derive the IS curve (Y as a function of r and e), LM curve (Y as a function of r) and the BP curve (r as a function of Y, e, and the capital mobility parameter z) interest rate, income, exchange rate and trade balance income, and trade balance? Draw the change on a graph. (b) Assuming free capital mobility (z → oo) and a flexible exchange rate, solve for the equilibrium (c) If government spending increases by 1800, what happens to the interest rate, exchange rate,

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