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- In the short-run macro model, if aggregate expenditure is less than GDP, output in the future will a. decline as firms cut production to stop the buildup of inventories b. increase as firms cut their prices to try to stop depletion of inventories c. remain unchanged indefinitely unless government takes action d. decline as firms increase their prices to stop the buildup of inventories e. increase as firms increase production to try to stop depletion of inventories2. Imports and ExportsNow we allow for international trade. Use the following information from problem 1: C = 400 + (8/9)*DI I = 300G = 800T = (1/2)*Y. Suppose that exports are constant at X = 300.Let imports be a fraction of real income: M = (1/9) * Y. a. Give intuition for why imports M are positively related to national income Y in the equation above.b. Suppose that national income increases by $1. How much will spending on imports increase (the marginal propensity to import) in this case? c. Compute the equilibrium level of national income under international trade. d. Suppose that government spending increases by $120. i) Compute the new equilibrium national income. ii) Based on your numerical answer to (i), calculate the change in national income from a one dollar increase in government spending. iii) Derive the new fiscal multiplier from an increase in government spending using an algebraic equation. Compare to Problem 2.d.(ii). Compare to Problem 1.c.(v).e. Trade…Those who say the growing current account deficit in the United States is not a significant problem make the argument that: 1.the current account deficit may hurt exporters, but American consumers gain as a result of lower relative prices. 2.the current account deficit is offset by an equally large capital account deficit, which ultimately leads to appreciation of the U.S. dollar. 3.the large current account deficit will ultimately lead to a current account surplus. 4.the increased investment in the United States as a result of the current account deficit will ultimately lead to increases in wealth and economic growth in the United States.
- Inflation and unemployment are twin problems that every government attempts to address. Elucidate with examples from Kenya.Which of the following statements is false? A. Real assets generate net-income to the society. B. In most societies, resources are allocated not by an all-powerful dictator, but through the combined choices of millions of households and firms. C. Liabilities sacrifice future benefits. D. Leveraged buyouts (LBOs) are the most common type of commodity investment strategies.can you answer question 33, please? 33) Transfer pricing may be a problem for host countries as A) profits may not be accurately recorded as occurring in the host country. B) the cost of exchanging one currency for another is costly in monetary terms and time. C) prices are transferred to the local currency resulting in losses if exchange takes place on a day when the exchange rate is 'low'. D) profits are always removed to the host country
- Q8.3) (a) A fast internationalisation strategy for Better Generation has some associated risks. What are these risks? (b) Better Generation requires some resources for a fast internationalisation strategy. How can Better Generation build these resources? (c) How should Better Generation develop its international strategy in terms of country chosen and entry modes?The developing countries are usually characterized by _________.a. primary-product exports, inadequate education and vulnerability in international relations.b. low levels of living, high levels of income inequality, and high dependency burdens.c. none of the aboved. all of the above(a) Suppose that the economy of Microland is expanding rabidly. Due to this rapid expansion, the Federal Reserve Bank is pursuing a contractionary monetary policy. Draw clearly labeled graphs for each market (Money market, Goods Market and Investment) to show the effects of this policy on the equilibrium interest rate, investment and output. (b) Suppose that the economy of Macroland is expanding rabidly. Due to this rapid expansion, the Federal Government is pursuing a contractionary fiscal policy. Draw clearly labeled graphs for each market (Money market, Goods Market and Investment) to show the effects of this policy on the equilibrium interest rate, investment and output. Is there any crowding-out due to the contractionary fiscal policy?
- QUESTION 13All else equal, suppose Country A has a higher level of economic mobility than Country B, which country would be more likely to have higher economic growth?a.Country Ab.Country Bc.There is no relationship between growth and economic mobilityd.It depends on what percentage of mobility is due to intergenerational mobility QUESTION 14The Lorenz curve shows the relationship between which of the following?a.Income inequality and GDP per capitab.Gini coefficients in one country over timec.The percentage of households and the percentage of income earned by those householdsd.Quintiles of income and average income of each quintile QUESTION 15Suppose a country has two sectors, A and B. Sector A uses more physical capital than B and workers are therefore more productive in sector A than in B. Suppose labor is freely mobile between the two sectors. An efficient allocation of labor requires that in equilibrium:a.sector A pays a higher wage than sector Bb.the marginal product in sector A…Consider the AA-DD model with flexible exchange rates. Assume the economy is initially at full employment. a) Suppose a temporary shock to the money demand pushes the economy into recession. Describe one policy intervention that takes the economy back to its pre- shock equilibrium position.Which of the statements below is FALSE? A. Multinational capital budgeting is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency. B. If we are using foreign currency for the NPV decision, all we have to do is restate all the foreign incremental cash flow in terms of future value and use the current exchange rate. C. In conducting a multinational NPV, one must be careful to avoid differences with rounding of exchange rates, discount rates, and cash flow to produce the exact same value. D. With the foreign currency approach in NPV analysis, if we know the appropriate discount rate in the home country and the expected inflation rates in the two countries, we can determine the appropriate foreign discount rate.