Using DD-AA-XX curves, compare the effect on the current account of temporary and permanent increases in government spending. include graph on your explanation..
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Using DD-AA-XX
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- In your macroeconomic lectures you are often told that exchange rates and interest ratesare important for macroeconomic decision-making.a. How does an increase in Japan’s government budget deficit affect each of thefollowing?(iii)Explain what is meant by the current account multiplier in relation to a fiscal expansion, giving the appropriate equation.5.a) “Fiscal policy is completely crowded out in a smnall open economy with floating exchange rate according to Mundell-Fleming Model”. How does it differ from crowding out of fiscal policy in a closed economy?.
- What are the automatic adjustment mechanism for current account imbalance under the classical and Keynesiab views? Discuss.Macroeconomic: 1. With a fixed exchange rate and high capital mobility, is it appropriate to use the fiscal lever to boost economic activity in order to achieve full employment? (explain your answer, you could use the ISLM BP model)Explain the essence of IS-LM-BP model and equilibrium in the model! Explain what happens if goods and money market equilibrium does not correspond with open economy equilibrium in the case of fix ER regime!
- Discuss why the devaluation of domestic currency improves net exports in the extended version of the DD-AA model. Use a diagram in support of your answer.what are two reasons Why is the statstic for fiscal deficits are so closely monitired in small fixed exchange rate economies?If an economy has current account and budget deficits, the government should tighten fiscal policy. State whether this statement is True, False or Uncertain. Explain why using the Balance of Trade or Balance of Payments curve and use the accounting framework. What does current account refer to here exactly? What does a budget deficit mean in technical terms. Give equations for both. Also draw a diagram to illustrate necessary fiscal policy implications.
- Answer only D &E ( No need to answer a,b,c) 18. Using AS-AD diagrams, illustrate each of the following economic situations by showing the patterns and shifts of either AS or AD that could cause them to happen: a. a rise in the price level triggered by higher oil prices; b. a rise in inflation that happens four years in a row because government spending keeps increasing; c. foreign investors gain confidence and increase the level of investment in the U.S. economy; d. the economies of trading partners grow very slowly, leading to a decrease in exports to those countries e. output declines slightly but the price level falls a great deal. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.You have the following annual data for the New Zealand economy ($bn): GDP (Y) = 184 Gross National Disposable Income (Yd) = 171 Net exports of goods and services (NX) = 0 Private Consumption (C) = 106 Government consumption (G) = 34 Based on this data, complete the following paragraph (enter numbers only). Investment (I) is equal to $____bn. The current account SELECT (surplus or deficit) is equal to $_____bn. The capital account part of the balance of payments (which for the purposes of this question includes both capital and financial accounts) therefore shows a SELECT (surplus or deficit) of $_____bn. National savings is equal to $_____bn.Assume that an economy prefers an internal balance (Y = Y) to an external balance (NX = 0). Then the only aim of the economy is to keep the equilibrium output level at the level of potential output (Yf= 1500 units). Suppose that the IS and BP models for this economy are as the following. Please the the attached photo
