In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.

Open in App

Solution

C = 40 + 0.8 YD

T = 50

I = 60

G = 40

X = 100

M = 50 + 0.05Y

Equilibrium income (Y)

Net export balance NX = X − M − 0.05Y

= 100 − 50 − 0.05 × 600

= 50 − 0.05 × 60

= 50 − 30 = 20

Suggest Corrections

Similar questions

Suppose C = 40 + 0.8YD, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y.

In the above example, if exports change to X = 100, find the change in equilibrium income and the net exports balance.

Suppose C = 40 + 0.8YD, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y

(i) Find equilibrium income.

(ii) Find the net export balance at equilibrium income.

(iii) What happens to equilibrium income and the net export balance when the government purchases increases from 40 to 50?

Suppose C = 40 + 0.8Y D. T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y

(a) Find equilibrium income

(b) Find the net export balance at equilibrium income

Why are exports included in the estimation of domestic income?

Join BYJU'S Learning Program