Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive, regardless of the direction of change. Magnitude of Change Direction of Change (Rubles) Exports Imports Net Exports Because of the identity equation that relates to net exports, the in U.S. net exports is matched by v in U.S. net capital outflow. Which of the following is an example of how the United States might be affected in this scenario? Check all that apply. O You buy RUB 7,000 worth of Russian bonds. O You store the rubles in your safety deposit box at home. O You purchase RUB 7,000 worth of stock in a Russian corporation.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter23: The International Trade And Capital Flows
Section: Chapter Questions
Problem 44P: Imagine that the U.S. economy finds itself in the following situation: a government budget deficit...
icon
Related questions
Question

I'm not sure how to solve this problem I don't know where I should begin

4. Net capital outflow and net exports
An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world
financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true:
Net Capital Out flow = Net Exports
In other words, if a transaction directly affects the left side of this equation, then it must also affect the right side. The following
problem will help you understand why this identity must hold.
Suppose you are a software engineer living in the United States, and you just sold your latest product to a Russian consumer for RUB 7,000.
Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the
direction of change is "No change," enter "0" in the Magnitude of Change column.
Hint: The magnitude of change should always be positive, regardless of the direction of change.
Magnitude of Change
Direction of Change
(Rubles)
Exports
Transcribed Image Text:4. Net capital outflow and net exports An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true: Net Capital Out flow = Net Exports In other words, if a transaction directly affects the left side of this equation, then it must also affect the right side. The following problem will help you understand why this identity must hold. Suppose you are a software engineer living in the United States, and you just sold your latest product to a Russian consumer for RUB 7,000. Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive, regardless of the direction of change. Magnitude of Change Direction of Change (Rubles) Exports
Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the
direction of change is "No change," enter "0" in the Magnitude of Change column.
Hint: The magnitude of change should always be positive, regardless of the direction of change.
Magnitude of Change
Direction of Change
(Rubles)
Exports
Imports
Net Exports
Because of the identity equation that relates to net exports, the
in U.S. net exports is matched by
in U.S. net capital
outflow. Which of the following is an example of how the United States might be affected in this scenario? Check all that apply.
O You buy RUB 7,000 worth of Russian bonds.
O You store the rubles in your safety deposit box at home.
O You purchase RUB 7,000 worth of stock in a Russian corporation.
Grade It Now
Save & Continue
Continue without saving
Transcribed Image Text:Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive, regardless of the direction of change. Magnitude of Change Direction of Change (Rubles) Exports Imports Net Exports Because of the identity equation that relates to net exports, the in U.S. net exports is matched by in U.S. net capital outflow. Which of the following is an example of how the United States might be affected in this scenario? Check all that apply. O You buy RUB 7,000 worth of Russian bonds. O You store the rubles in your safety deposit box at home. O You purchase RUB 7,000 worth of stock in a Russian corporation. Grade It Now Save & Continue Continue without saving
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Inputs
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781305971509
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781285165912
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning