Which one of the statements below is FALSE: a. According to the national income accounts identity, net capital outflow must equal the trade surplus. O b. Net capital outflow is the excess of domestic saving over domestic investment. O c. The trade surplus and net capital outflow must both equal zero. O d. According to the national income accounts identity, net capital outflow must equal net exports.
Q: Scenario: Open Economy S= / In an open economy the GDP is $12 trillion this year. Consumption is $8…
A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…
Q: The closed economies of Sokovia and Madripoor want to increase their GDP, so that it reaches 200…
A: Marginal propensity to save refers to the portion of income that one will save instead of consuming.…
Q: What happened here? All data in real $bn. NX Y. NX new NX old Oa. our currency appreciated, raising…
A: Ques 1) Net exports is given as the value of a nation's total export goods and services minus the…
Q: Consumption expenditure: Investment expenditure: Government budget balance Money demand C= 100 +0.8…
A:
Q: ADVANCED ANALYSIS Assume that the consumption schedule for a mixed open economy is such that…
A: Given, lg=5G=40Xn=30T=40
Q: ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that…
A: Given, C= 60+0.8y
Q: If the Bank of Canada raises its target for the overnight interest rate from 3 percent to 3.25…
A: The rate at which financial institutions or commercial banks lend or borrow money from other…
Q: Question 22 Suppose that the local real interest rate rises relative to real interest rates in other…
A: Answer: If the local real interest rate rises relative to other countries then foreigners will be…
Q: True of False? In the short run, stock market returns always align with macroeconomic performance…
A: 1. As a general rule, the stock markets in an economy are directly correlated with the GDP of the…
Q: ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that…
A: a) Given, Consumption C=100 + 0.75Y Investment Ig= 60 Govt. expenditure G= 0…
Q: Suppose that there is no government and no international trade. When C + I (or AE)greater than the…
A: The aggregate expenditure is the sum of the consumption, government expenditure, planned investment,…
Q: When exports exceed imports, all of the following are true except: O net foreign investment is…
A: Export means when goods and services are produced in one country and sold to buyer in other country…
Q: 2. A. Using symbols and explaining their meaning, distinguish between: (1) the domestic demand…
A:
Q: Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 +…
A: The IS-LM model is represented by a graph that shows the interaction between the goods market and…
Q: In an open economy with a given level of real interest rates and risk, a decrease in real interest…
A: In an open economy, any change in real interest rate will have a significant impact on capital…
Q: Pluto nation is an open economy with a gross domestic product of $2,000 million, government…
A: Answer; Option (c) $ 900 million is correct
Q: 2. A prolonged high national savings rate can cause a problem in the domestic economy because.. it…
A: National saving refers to the total amount of money saved by individuals, corporations, and…
Q: Capital consumption allowance 440 Federal government purchases of goods and services Compensation of…
A: The expenditure approach is a method for calculating a nation's gross domestic product (GDP) by…
Q: If the National bank of Kazakhstan undertakes a policy to raise interest rates, capital flows…
A: Basics:- When interest rate rises, the capital outflow of the country decreases as the home country…
Q: Suppose a country, Macroland, doesa't trade with other countries Its GDP is S20 billion. Its…
A: As National Income Identity Y = C+I+G+NX where C is consumption Y is GDP G is govt spending NX is…
Q: Suppose the government borrows funds to finance the purchase of state-of-the-art IT infrastructure.…
A: Here, it is given that government borrows funds to purchase state-of-the-art IT infrastructure.
Q: All of the following statements are correct EXCEPT O NDP = GDP - depreciation (capital consumption…
A: Answer : NI = NDP + indirect business taxes
Q: L5. A large open economy has desired national saving of Sd = 20 + 200rW, and desired national…
A: Answer -
Q: In the classical model of the LR small open economy, when domestic autonomous consumption decreases…
A: Given : There is decrease in autonomous consumption. It is a situation of LR small open economy.
Q: Suppose Canada currently has a trade deficit. Which of the following changes could potentially lead…
A: In the international market, the value of the currency of a country influence the total units sales…
Q: If national saving in a closed economy is greater than zero, which of the following must be true? O…
A: We know that saving is the rest part of income after consumption . Therefore income = Consumption+…
Q: Assume that four-sector model is at play. C+l+G. All expenditures are autonomous. Given: = 700 + .80…
A: Given information C=700+.80(1-t)Y t=0.25 I=210-75i G=1000 L=0.20Y-40i M/P=800
Q: A deficit-financed increase in government purchases O A. crowds out investment by decreasing the…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Which of the following statements describes a trade deficit? O a) the difference between a nation's…
A: Balance of trade is defined as a difference between the value of a country's exports and the value…
Q: Disposable income is equal to O A. national income minus government spending. O B. consumption…
A: Since you have posted multiple independent questions in the same request, we will solve the first…
Q: 1. Xanadu's desired national saving can be expressed as: O. Sd = 20 + 200r O. Sd = 10 + 200r O.…
A: Since You have posted Multiple question, as per guidelines we can solve only one at a time
Q: Consider a two-period economy facing the following budget constraints: Ci +k +b< yı, C2 S2 + (1+r)b,…
A: When the needs and wants of human beings are unlimited and the budget of one person is limited, it…
Q: Which of the following is (are) likely to lead to increased capital inflow into Canada? O a. All of…
A: Capital inflow in Canada refers to the situation when Canada receives Capital or financial…
Q: If there is a sharp increase in oil prices, in the short run. O. Consumption and investment will…
A: Oil price increment effects: When price of oil increases then it will lead to increase the overall…
Q: verything else held constant, if a factor decreases the demand for ________ goods relative to…
A: When demand for domestic goods falls relative to the foreign goods then export of domestic goods…
Q: What is a foreign exchange rate? (a) The rate at which the currency of one country trades for the…
A: 1. Foreign exchange market is the market where currencies of different nations trade with each…
Q: a. The major economic functions of the interest rate are O to provide market incentives for saving…
A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…
Q: In an attempt to offset debt accumulated during the covid crisis, the Nigerian government passes…
A: Fiscal policy can be defined as the use of government expenditure and taxation to influence the…
Q: Which one of the following is TRUE? Select one: O a. Our productive capacity declines when net…
A: Net Investment = Gross Investment ( money spent on capital assets) - Depreciation of those assets.
Q: Between 2014 and 2015, the exports of the U.S. economy decreased by $5 billion and its imports…
A: GDP is the sum total of the market value of all goods and services produced within the geographical…
Q: You observe a closed economy that has a government deficit and positive investment. Which of the…
A: In order to answer this question, we will use the concepts of public saving, private saving and…
Q: Suppose the Bank of Canada raises its target for the overnight interest rate while interest rates in…
A: The measure that depicts the value of one currency being measured in terms of another currency is…
Q: Last year a country had exports of $100 billion, imports of $70 billion, and purchased $60 billion…
A: To find : Value of domestic assets purchased by foreigners.
Q: Which of the following is not an argument by those who oppose tax-law changes to encourage saving? O…
A: There are some individuals who are opposed to the view that tax-law changes are beneficial for…
Q: Consumption expenditure: Investment expenditure: Government budget balance Money demand C = 100 +0.8…
A: The government financial system that analyses the health of an economy, expected growth, economic…
Q: A country has $100 million of net exports and $170 million of saving. Net capital outflow is O A.…
A: In a open economy, at the equilibrium leakages are always equal to injections. Leakages are the…
Q: What rate of return would she have earned during the year (between July 2021 and July 2022)? Show…
A: Follow the following steps Covert USD to Turkish Lira Apply Interest rate and add it to the amount…
Answer and Breif explantion
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- In the Solow growth model with no population growth and no technological change, the output per worker increases when investment per worker is greater than depreciation of capital per worker. True FalseDiscuss how extending the Solow model with human capital changes our understanding of the growth process in practice.In the Solow growth model, suppose that the per-worker production function is given by y=zk2/3 . The saving rate is s, depreciation rate is d, and population growth rate is n. Calculate the per capita capital (k) and output per worker (y) in the steady state.
- 5 Income per person exceeds $25,000 in many countries but it is below $1,000 per person in many other countries. Based on the Solow growth model, suggest at least four possible explanations for this gap in living standards.Suppose that the depreciation rate increases. In the Solow growth model, determine the effects of this on the quantity of capital per worker and on output per worker in the steady state. Explain the economic intuition behind your results.In a Solow growth model with population growth but no technological change, show graphically that an increase in the rate of depreciation will reduce the steady-state value of capital per worker and output per worker. It is reasonable to expect that depreciation rates differ across countries? Why or why not? Please be specific.
- Carefully explain the Solow Growth theory and its extended variations. That is, the basic Solow model and the model expanded to incorporate at least two other sources of economic growth.Explain how to derive the investment per efficiency unit of labour curve in the Solow growth model.Consider our graph of the basic Solow growth model. On the graph above: y represents real output (or income) per worker; y=F(k) is the production function; k is the capital stock per worker; s is the savings rate; δ is the rate of depreciation of capital; ‘i’ represents business investment (purchases of capital) per worker); ‘LF’ stands for Loanable Funds. (For purposed of intuition, think of capital as ‘machines.’) If we started out with a capital (per worker) stock lower than the steady-state stock ( , above), we would expect to see which of the following happen over time? Group of answer choices A) Positive growth rates while the capital stock increases. B) Negative growth rates while the capital stock increases. C) Negative growth rates while the capital stock decreases. D) Positive growth rates while the capital stock stays less than the steady-state level. E) Positive growth rates while the capital stock decreases.
- Consider the following Solow growth model in which households save a constant fraction of their income. Let N be the population (also the labor force) in the current period. Assume that the population follows N′ = (1+n)N where N′ is the population in the future period, and n is the net population growth rate. Assume that the output is produced according to the production function Y = zF(K, N), where z is the total factor productivity, K is capital stock, and F(K, N) exhibits constant returns to scale. Capital depreciates at the rate d where 0 < d < 1. The capital stock changes over time according to K′ = (1 − d)K + I where I is the investment level. (a) Derive the equation that determines the future capital-per-worker in competitive equilibrium. Here is some additional information for parts (5b), (5c), and (5d). Suppose that the economy is initially in steady state, and experiences a natural disaster (e.g. the recent quake and tsunami in Japan in 2011) that destroys some of the…Suppose we started out at the steady state capital stock in the basic Solow growth model (see graph a few questions ago). If there subsequently were an increase in the demand for loanable funds due to more favorable tax treatment of business investment, ceteris paribus (i.e., holding other factors constant, including no shift in the supply of loanable funds), then as we move to the new steady state over time we would expect to see Group of answer choices A) economic growth rates turn negative as we move toward the new steady state and the nation’s capital stock to decrease from its current level. B) economic growth rates turn positive as we move toward the new steady state and the nation’s capital stock to decrease from its current level. C) economic growth rates turn positive as we move toward the new steady state and the nation’s capital stock to grow from its current level. D) economic growth rates turn negative as we move toward the new steady state and the nation’s…Solow's Growth Model provides the hypothesis that capital accumulation can boost economic growth. a) Through a system of mathematical equations, describe the production side of the output of the Solow economy! b) Explain both through narrative and mathematical equation systems how savings rates can affect per capita income growth!