Exercice de finance en anglais

QUESTION 1

Our Economy

Y= C+I+G+NX

C= 100+0.8Yd

I= 300-1000i

NX= 195-0.1Y-100(ER)

ER=0.75+5i

M= (800-2000i) P

G= 200 t= 0.25 M= 800 P= 1

a) G increase by $50. Calculate 4th year path of inflation, domestic general price level, national output, interest rate and ER

NX= 195-0.1Y-100(0.75+5i)

= 195-0.1Y-500i

Y=C+I+G+NX/1-mpc+mpct+mpi

Y= 720-1500i/0.5

Y= 1440-3000i

i= 800-0.8Y/-2000

= -0.4+0.0004Y

Y= 1440-3000(-0.4+0.0004Y)

Y= 1200

i= -0.4+0.0004(1200)

=0.08

ER= 0.75+5*0.08

ER= 1.15

Year Inflation (π) Price Y Interest rate (i) ER

0 0.0000 1.0000 1200.0000 0.0800 1.1500

1 0.0000 1.0000 1245.4545 0.0982 1.2410

2 0.0189 1.0189 1235.2995 0.1016 1.2580

3 0.0147 1.0338 1227.5840 0.1041 1.2705

4 0.0114 1.0455 1221.6797 0.1061 1.2805

YEAR1

Y1= (770-1500i)/0.5

Y1= 1540-3000(-0.4+0.0004Y)

Y1= 1245.4545

i1= -0.4+0.0004(1245.4545) = 0.0982

ER1= 0.75+5*0.0982= 1.2410

YEAR 2

Inflation2= 0.5*(1245.4545-1200)/1200

= 0.0189

P=1+1*0.0189 = 1.0189

Y= 472.7272+0.9090G+0.68(M/P)

Y2=472.7272+0.9090*250+0.6818(800/1.0189)

= 1235.2995

i2= (800/1.0189-0.8Y)/-2000

i2= 0.1016

ER2= 0.75+5*0.1016

YEAR 3

Inflation 3= 0.5(1235.2995-1200)/1200

= 0.0147

P3= 1.0189+1.0189*0.0147

=1.0338

Y3= 472.7272+0.9090(250)+0.6818(800/1.0338)

1227.5840

i3= (773.8440-0.8Y)/-2000

= 0.1041

ER3= 0.75+5*0.1041

= 1.2705

YEAR 4

Inflation4= 0.5(1227.5840-1200)/1200

= 0.0114

P4= 1.0338+1.0338*0.0114

=1.0455

Y4= 472.7272+0.9090*250+0.6818(800/1.0455)

= 1221.6797

i4= (765.1841-0.8Y)/-2000

= 0.1061

ER4= 0.75+5*0.1061

= 1.2805

b) Calculate the full government spending policy multiplier

Y= (520+ G- 1500i)/0.5

= 1040+2G-3000i

Government spending multiplier= 2G

c) Monetary policy multiplier

i= (M/P-0.8P)/-2000

= -0.0005M/P+0.0004Y

Monetary policy multiplier= -0.0005M/P

d) General Price level after the economy fully adjusts to the AD shock caused by the increase in G.

Year Inflation Price GDP

5 0.0090 1.0549 1217.0309

6 0.0070 1.0622 1212.1146

7 0.0050 1.0675 1209.5718

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