Instruction
Q1, Q2
You're thinking of output in terms of being built up from the expenditure functions.
The key idea of Part II (the Exam I material) is that output is determined on the supply side.
Look at Ch. 6.
Look at the practice exam.
You should be doing that sort of thing, but with the parameters specified by this exam.
Q3
I can't see the curves on your paper. I see the axes, and I see the dashed lines to connect points in the graph space to points on the axes, but I don't see the curves.
Q6
Note that this is about investment demand, not the quantity of investment.
Q7
Note the difference between the relationship between investment and the interest rate, and the relationship between investment demand and the interest rate. Think about the difference between, on the one hand, price of gas and the quantity of gas demanded, and on the other hand, the demand curve for gasoline and the price of gasoline..
Q8
Follow a causal chain through from 1. change in investment demand, to 2. change in the interest rate, to 3. change in either GX or IM, to 4. change in the trade balance.
Q9
Remember that a trade balance doesn't mean exports are (roughly) equal to imports. It's simply an observation about the relationship between the two quantities. You can have a trade deficit or a trade surplus; your "trade balance" could be either one of those, depending on which of GX and IM was bigger.
Q10
e0 can get bigger or smaller. If you trace through its effects, think about what e0 affects, and how that thing affects the trade balance. Then tie that back to Q9: in order to see the kind of change in the trade balance that you identified in Q9, would e0 have to get bigger, or smaller?
Q11
Look at what's happening in the chart in terms of how IM is changing. What kind of change in IM(Y) would cause what you see happening with IM?
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