Suppose that national saving is $1568 billion, investment is $1835 billion, and private saving is $1490 billion. How much is the current account balance? Note: current account balance - NX+ NFP. O $267 billion 01-267 billion -$221 billion -$221 billion
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- What does it mean to say that a currency appreciates? Depreciates? Becomes stronger? Becomes weaker?1. When calculating gross national disposable income in an open economy, we adjust gross nationalexpenditure by:a. subtracting exports and adding back imports.b. adding in net income earned from foreign sources, plus the trade balance, plus net unilateraltransfers from abroad.c. subtracting depreciation, payroll taxes, and indirect business taxes, while adding in subsidies.d. taking out net factor income from abroad and subtracting net unilateral transfers.Suppose that the government decides to cut spending. In a three graphs diagram, show theimpact of this policy on real interest rate, national saving, investment, net capital outflows,demand for currency (NX), and supply of currency? Will the currency appreciate ordepreciate?
- ADVANCED ANALYSIS Assume that the consumption schedule for a mixed open economy is such that consumption is: C = 250 + 0.8Yd Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 50 and Xn = 30. Lastly, assume government spending G = 40 and taxes T = 40. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig + G + Xn Given that taxes T are present, the consumption schedule can be rewritten as: C = 250 + 0.8(Y - T) Instructions: Enter your answers as whole numbers.a. Calculate the equilibrium level of income or real GDP for this economy. Equilibrium GDP (Y) = $ . b. What happens to equilibrium GDP if Xn changes to 40? Equilibrium GDP (Y) = $ . What does this outcome reveal about the size of the spending multiplier? Spending multiplier = .A6 describe the changes of current, capital, and financial account balances. Is the deficit of current account financed by the surplus of capital and financial accounts for that country? Or is an opposite pattern found in a specific time period? Do you observe the inverse relationship between current and capital/financial account balances for these countries?If a country’s currency is expected to appreciatein value, what would you think will be the impact ofexpected exchange rates on yields (e.g., the interest ratepaid on government bonds) in that country? Hint: Thinkabout how expected exchange rate changes and interestrates affect a currency's demand and supply
- . The government has proposed Rs1,289 billion for the defence budget for the year 2020-21, 5.1% more compared to last year’s revised defence estimates of Rs1,227 billion for the year 2019-20. If Government cut defence Budget, what happens to saving, investment, the trade balance, the interest rate, inflation rate and the exchange rate? And similarly, Government decreases the interest rate due to COVID-19 so explain what impact on consumption, investment and interest rate. Justify the answer with your own word and examples.3 In July 2021, a one-year Turkish bond had an interest rate of 18% and the exchange rate between the dollar and the Turkish lira was $1 = 8.68 lira. As of July 2022, the exchange rate has changed to $1 = 17.28 lira. Suppose an American invested $1000 in a one-year Turkish bond in July 2021. What rate of return would she have earned during the year (between July 2021 and July 2022)? Show all workFor a European investor, what is the rate of return in euro on: “a ¥10,000 deposit in a Japanese bank in a year when the interest rate on Yen is 12 % and the Yen per euros exchange rate moves from ¥1.40 per euros to ¥1.20 per euros” A. Compute the rate of return without the formula B. Compute the approximation of this rate of return using the formula Only typed answer
- 1. Would each of the following groups be happy or unhappy if ringgit appreciated? Explain.A) Hong Kong pension funds holding Malaysian government bonds B) Malaysian manufacturing industries C) Australian tourists planning a trip to Malaysia D) A Malaysian firm trying to purchase property overseas 2. How would the following transactions affect Malaysian exports, imports and net exports? A)A Thai citizen shops at a store in Kota BahruIf a country has a persistently negative current account, this implies that it is “borrowing” internationally. Explain why and what this means with respect to net capital flows into the country and with respect to the relationship between Saving and Investment in the country.Why do people of home country demand foreign currencies and why do they supply foreign currencies in forex market. Assuming that capital inflow in home country increases due to more negative impact of Corona virus in developed countries, explain whether PKR will appreciate or depreciate.