2. Closed economy model there is just income Y, and consumption C inside the model, it means that, these variables are endogenous, but Investment I, net exports and government spending G are outside the model and they are exogenous. Model would look like this:

In the open economy model there is more endogenous variables than just Income Y, and consumption C. For example Net exports X can be endogenous variable:

and the multiplier in this case would be:

The multiplier for the open economy model is smaller because we have to add the denominator the marginal propensity to import, than the multiplier for the closed economy model and that actually makes the closed economy multiplier stronger.

Y = a + b1 (1-t) Y + b2A + e- dR + OY + G + g-

d+n d+n

Some topics in this essay:
YE AD=, Derive Solve, Exports Money, Derive YEAD, MONEY MULTIPLIER, Ye AD, LM Solve, Net Exports, Government Multiplier, YE AD=38466667, government spending, re =, net exports, endogenous variable, + +, multiplier 1, + â€, + b2a +, b2a +, + b2a, money multiplier, = ky â€, / = ky, + + â€, k/h*d+n + 1-b1-t-o-t+m,