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Explain why the demand for domestic goods curve (ZZ) has a different slope than thedomestic demand curve

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January 10th, 2018

c) Explain why the demand for domestic goods curve (ZZ) has a different slope than thedomestic demand curve (DD).d) Using the ZZ/Y and NX graphs, illustrate graphically and explain what effect an increasein taxes,T, will have on output, exports, imports, and net exports. Clearly label all curves andclearly label the initial and final equilibria.e) Using the ZZ/Y and NX graphs, illustrate graphically and explain what effect an increasein foreign output (Y*) will have on output, exports, imports, and net exports. Clearly label allcurves and clearly label the initial and final equilibria.g) Explain the Marshall-Lerner condition. Assuming that the Marshall-Lerner conditionholds, and using the ZZ/Y and NX graphs, illustrate graphically and explain in words whateffect a real depreciation will have on output, exports, imports, and net exports. Clearly labelall curves and clearly label the initial and final equilibria.

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