ECON 1110 Lecture Notes - Lecture 9: Xm Satellite Radio, Open Economy

• School: University of Windsor
• Department: Economics
• Course: ECON 1110
• Professor: Peter Miller

Document Summary

Imports = (marginal propensity to import)(national income: measures the increase in import expenditures induced by a. Assume: x = x0 (exports are autonomous/constant) Nx function is downward sloping: increase in national income = increase in imports = decrease in net exports. Increase in foreign income = increase in exports = increase in net exports. Decrease in foreign income = decrease in exports = decrease in. X0 = x0 shifts parallel downwards = nx function will shift parallel downwards. Nx function can rotate: increase in international relative prices = increase in m = net exports increase in imports = decrease in m1y my. Nx1 increase in international relative prices = increase in marginal propensity to import = import function becomes steeper (rotate counter-clockwise) = nx function will rotate clockwise. Ae = c + i + g + x m. Ae = c0 + byd + i0 + g0 + x0 my.