ECON 103 Midterm: midterm1-eco103-05
Document Summary
The national accounting identity relates national income to its uses y = c + i + ex im . The current account is de ned as ca = Ex im : using the above relationships, derive an expression for domestic savings. What are the two uses to which domestic savings can be applied in an open economy: suppose domestic residents are net foreign investors. 2 covered and uncovered interest parity: 10 minutes. State two assumptions that explain the restric- tiveness of the less general condition. Consider the following investment position, where e is the nominal spot exchange rate and. The country dollaridor manages its currency peso so that it remains at an exchange rate of 1 to the us dollar. Monetary policy until then is expected to remain unaltered. 5 foreign output and the exchange rate: 10 minutes. Foreign real national income y gnp,* drops temporarily but expectations of the future ex- change rate remain unchanged.
