country with current account deficit indicates a sign of weakness while a country with current account surplus indicates a sign of strength in terms of economic growth” Do you agree with the above statement? Justify your answer.

Q: If the U.S. dollar appreciates and prices remain the same at home and abroad, foreign goods become…

A: Answer to the question is as follows :

Q: Now consider a small open economy, assuming domestic output is held constant and the country…

A: A small open economy's currency is impacted heavily by capital flows.

Q: Suppose in the goods market equilibrium of an open economy, saving is $6 billion, and investment is…

A: According to the question, Saving= $6 billion Investment=$8 billion Measurement error =0

Q: Comment on the following statement: "Since the United States imports more than it expona. It is…

A: The balance of payment (BOP) is the financial statement of a country which includes all its…

Q: In a fixed exchange rate regime, which of the following policies could lead to a greater trade…

A: Devaluation of currency refers to the act in which the government of a country decreases the value…

Q: According to David Hume’s theory of automatic price adjustment, countries experiencing current…

A: Price specie flow mechanism: It refers to the theory under which how the trade balances can be…

Q: In 2020  the United States had a current account deficit. The current account deficit implies that…

A: In an economy, the deficit can be of four types. The government budget deficit, the balance of…

Q: Following an expansionary monetary policy, we would expect lower interest rates, dollar   a.…

A: Expansionary monetary policy is used when the Reserve Bank or the central bank decides to stimulate…

Q: China had a $214 billion overall current account surplus in 2012. Assuming that China’s net debt…

A: Current account (CA) includes the trade of G&S done with abroad while the capital account…

Q: How can a nation in a flexible exchange rate regime correct the problems of inflation, recession and…

A: A Flexible Exchange rate is defined as a regime where the currency of a country is set by the…

Q: Indicate whether the following statements are true, false, or uncertain and explain why.   1. A…

A: Let's have a look on the statements below:

Q: Describe two measures that can used by the government to correct a deficit on the current account of…

A: Balance of payment: The balance of payments is a database of all foreign trade and financial…

Q: An increase in government spending in a simple open economy leads to Fall in both budget and current…

A: With higher government spending, government's expenditure will be more than the government's revenue…

Q: You have the following annual figures for the New Zealand economy.             Investment…

A: Note:- Dear learner you have posted a question with multiple sub parts, as per our policy we have…

Q: Japan has run large current account surpluses for much of the past two decades, yet no one ever asks…

A: Balance of trade of a country denotes the imports and exports of the country.

Q: Consider an open economy. If aggregate desired saving is greater than aggregate desired investment,…

A: Open economy interacts with other economies freely around the world.

Q: ‘According to David Hume’s theory of automatic price adjustment, countries experiencing current…

A: Price specie flow mechanism: It refers to the theory under which how the trade balances can be…

Q: A surplus in a country's financial/capital account necessarily means a recessionary economy a…

A: Basics:- Capital account of the country shows net flow of funds of country. Inflows of funds means…

Q: Consider an economy that begins with both internal and external balance. What would happen if the…

A: It would develop an excessively large current account deficit with excessive unemployment. This is…

Q: The figure below shows the flow of goods, services, and payments between Kenya (home country) and…

A: 1) The top section keeps track of the flow of exports and imports, as well as the payments…

Q: Other fundamental things equal, an increase in the exchange rate value of the domestic currency will…

A: The current account is the balance of trade reflecting all the payments made for goods, services,…

Q: Everything else equal, if a country has exports of $15 billion and imports of $16 billion, it…

A: The economies around the globe are involved in trading activities with each other. The countries…

Q: In 2019 Country A had a current account deficit of $1.2 billion. CountryA's capital account was in a…

A: Current Account is the account which show the value of export and imports done by country in a…

Q: (D). A current account deficit (CA Y) and national saving is less than investment spending (S < I).…

A: Current Account Deficit measures the trade value of a country, where the goods and services that are…

Q: A Current account deficit often raises the opposition of protectionists who think that a current…

A: There are other points of disagreement, including the definition of a current account deficit or…

Q: Classify each of the following as debits or credits in the U.S. balance of payments.   Americans…

A: Since you have posted a question with multiple sub parts, we will solve the first three sub parts…

Q: If the federal government is running a surplus,     the surplus becomes a source of funds for the…

A: A surplus is the amount of an asset or resource that is greater than the amount that is actively…

Q: Suppose that during a recent year for the United States, merchandise imports were $2 trillion,…

A: Merchandise Trade Balance = Merchandise Exports - Merchandise Import If the Merchandise imports are…

Q: In the balance of payments statement, a current account surplus will be matched by a   capital and…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: A current account deficit is generally a result of:     a large amount of U.S. purchases of…

A: Current account deficit:The current account deficit refers the measures of a country's trade where…

Q: An increase in government spending in a simple open economy leads to An increase in the budget…

A: Fiscal Policy  Fiscal policy refers to the policy of the government and central bank by which the…

Q: If our (U.S.) current account is in deficit we are buying foreign financial assets…

A: A country needs to fund its excess of exports over imports; a capital account surplus must always…

Q: In the balance of payments, a current account deficit is balanced by a capital account surplus. True

A: Balance of payments (BOP) is a record of transactions made between residents of a country and the…

Q: What is the meaning of a surplus (deficit) on the current account balance? What economic…

A: Current Account Balance A balance of payment is a statement that records all the transactions of a…

Q: To “cure” their balance of payments deficits without altering exchange rates, Southeast Asian…

A: The 1997–98 Asian financial crisis started in Thailand and afterwards immediately reached to…

Q: For a small open economy with a fixed exchange rate: а. monetary policy is effective and fiscal…

A: In the international market, there are two types of exchange rate system that are fixed exchange…

Q: Ricardian equivalence suggests that government budget deficits generated by decreases in current…

A: Current account:- it is a record of a country's transactions of goods and services, net earnings on…

Q: Under fixed exchange rate system and small open economy, expansionary fiscal policy is effective…

A: Fixed exchange rate regime is where a country's value is fixed by some monetary authority against…

Q: 2-16 In a system of fixed exchange rates, the automatic balance-of-payments adjustment process for a…

A: *Answer:

Q: As domestic currency appreciates, we would expect   a. Trade deficit to decrease.   b. Trade deficit…

A: Appreciation of the currency refers to the increase in the price of the currency in terms of other…

Q: In open economies, policy makers are motivated by the goal of internal balance and external balance.…

A: Internal Balance is defined as a situation in which the consumption in a given economy hardly equals…

Q: If the federal government is running a surplus, Question 15 options: taxes must fall…

A: Budget surplus It refers to a situation in which the expenditure of government is less than its…