ECON 102 Quiz: ECON 102 UW Madison Quiz4Summer2015withSolutions
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Please write your answers neatly and legibly: use the simple keynesian model developed in class to analyze the economy described by the following information. Tr = 0 (there are no transfers in this economy) Yfe = y full employment = 150: (1 point) examine this data. Sg = -10 since g > t. this means that the government is running a deficit and therefore it has negative government saving: (1 point) examine this data. This country is running a trade deficit since exports are less than imports. (x m) = -10: the trade deficit is equal to -10. When a country runs a trade deficit this implies that the country has positive capital inflows: ki = m x = 30 20 = 10. This economy is borrowing from foreigners: (1 point) determine the equilibrium level of gdp for this economy. Show any formulas you use and show your work to get full credit for this answer.
