If Canada increase its export of lithium, in such a way that national exports would increase, would that actually increase Canadian output? Or would it be washed out through an equal increase in imports? Explain your reasoning.
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If Canada increase its export of lithium, in such a way that national exports would increase, would that actually increase Canadian output? Or would it be washed out through an equal increase in imports? Explain your reasoning.
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- Answer the given question with a proper explanation and step-by-step solution. Suppose that εD = 0.70 and ε_D^F = 0.50 for a given country: Suppose that the foreign currency price of this country’s exports falls by 18% following a devaluation. What will happen to the quantity of exports?Consider a small country that is closed to trade, so its net exports are equal to zero. The following equations describe the economy of this country in billions of dollars, where C is consumption, DI is disposable income, I is investment, and G is government purchases: C� = = 30+0.8×DI30+0.8×DI G� = = 5050 I� = = 6060 Initially, this economy had a lump sum tax. Suppose net taxes were $50 billion, so that disposable income was equal to Y – 50, where Y is real GDP. In this case, this economy's aggregate output demanded was ___________ . Suppose the government decides to increase spending by $10 billion without raising taxes. Because the spending multiplier is ____________ , this will increase the economy's aggregate output demanded by ____________ . Now suppose that the government switches to a proportional tax on income of 10%. Because consumers retain the remaining 90% of their income, disposable income is now equal to 0.90Y. In this case, the economy's aggregate output…Which factors may effect export and capital sensitivity in a country?And what type of policies may be used to increase the export and capital sensitivity? Why?
- Q2-8 The simple Marshall-Lerner condition would suggest that one of the following cases would produce a worsening of the trade balance if the country's currency depreciated. Which one?(The negative sign on elasticities is being ignored; also, assume that trade is initially balanced.) Select one: a. elasticity of demand for exports = 0.8; elasticity of demand for imports = 0.5 b. elasticity of demand for exports = 0.4; elasticity of demand for imports = 0.6 c. demand curve for exports is vertical; demand curve for imports is horizontal d. elasticity of demand for exports = 0.8; elasticity of demand for imports = 0.1Suppose Americans suddenly develop a strong taste for Canadian whiskey. What happens to the demand for Canadian dollars in the foreign exchange market? What happens to the value of Canadian dollars in the foreign exchange market? What about U.S. dollars? What happens to the quantity of net exports in Canada, other than whiskey, as a result of your answer in part b? What about the U.S.?What difference might it make to the Australian economy if the trading relationship between China and Australia deteriorates as political tensions continue to increase?
- What effect would an appreciation of the U.S. dollar, relative to the Chinese Yuan, have on both the quantity of our exports to China and the quantity of our imports from China.Explain the effect of a weak Kenya Shilling to the demand for our country’s exports and importsPeru is growing relatively quickly and has begun to attract large inflows of foreign direct investment. While Peru relishes the benefit of the inflows, it is concerned about the potential negative effects if the foreign investors pull out their investments quickly. One particular reason for Peru to be concerned is that its banks have taken out large loans denominated in U.S. dollars and European euros from foreign banks. If the foreign direct investment is withdrawn quickly from Peru, what will be the effect on each of these items? A. Peru's money supply - B. Peru's exchange rate with other countries - C. Peru's exports - D. Peru's trade deficit - Answer Bank: No Effect, Increase or Decrease
- Why does the United States not have an absolute in coffee? Which country is leading in producing coffee for the United States?If you observed a country with a rapidly growing trade surplus over a period of a year or so,would you be more likely to believe that the country's economy was in a period of recession or of rapid growth? Explain.Derive graphically the aggregate demand curve under fixed exchange rates and explain the transmission mechanism from a price change to an output change.
