With perfect capital mobility and other things equal, an exogenous increase in demand for a country's exports will lead to ______ increase in the country's national income under fixed exchange rates than under flexible exchange rates. Select one: a. a greater b. a smaller c. the same d. a greater, a smaller, or the same; it is impossible to determine without more information

Q: Which of the following is not an assumption of the small open economy? a.the domestic interest rate…

A: The Mundell Flaming Model is the basic economic model which shows the short term relationship…

Q: Explain, with the aid of a graph, what will happen to the rand/dollar exchange rate and the…

A: The exchange rate is USD per Rand. Now, when the US buys anything from South Africa, it converts USD…

Q: Explain: “U.S. exports earn supplies of foreign currencies that Americans can use to finance…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Define the trade balance for an open economy and explain the relationship between the trade balance…

A: The real exchange rate (RER) among currencies is the product of the nominal change rate (the dollar…

Q: Suppose in the goods market equilibrium of an open economy, saving is $6 billion, and investment is…

A: According to the question, Saving= $6 billion Investment=$8 billion Measurement error =0

Q: State whether each of the following events involves a financial flow to the U.S. economy or away…

A: An export sales to Germany involves a financial flow to the U.S. economy from Germany. The returns…

Q: A fall in consumer confidence about the future, which induces consumers to spend less and save more,…

A: Floating exchange rate: It is an exchange rate system where the currency value of a country is set…

Q: 8. An increase in national saving requires either a rise in investment or an increase in the capital…

A: From the national income identity, an open economy can be expressed as follows,  Y = C + I + G + NX…

Q: Suppose that US citizens start saving more. What does this imply about the supply of loanable funds…

A: The impact of saving on real rate of interest is illustrated below:

Q: Consider an economy with a floating exchange rate that also allows borrowing from or lending to…

A: In an open economy, any change in domestic interest rate will have an impact on the demand and…

Q: One of the major trading partners of Mexico is the USA. In 2009, one US dollar was equal to 13…

A: The exchange rate is the value of the currency of one country in terms of the currency of another…

Q: Suppose that global investors fear a less friendly environment in Argentina in the face of elevated…

A: The economic outlook of the country is one of the determinant factors attracting global investors to…

Q: In 2018, Belize had a GDP of 4 billion Belize dollars, and a population of 400,000 people. The…

A: A way of measuring the economic welfare of a nation, the GDP is the amalgamation of all the market…

Q: In the open-economy macroeconomic model, if investment demand increases, then the real interest rate…

A: In an open economy macroeconomic model, trade between countries takes place. The real interest rate…

Q: You have the following annual figures for the New Zealand economy.             Investment…

A: Note:- Dear learner you have posted a question with multiple sub parts, as per our policy we have…

Q: Suppose that Y =Y,NX T in the U.S. Using the large open economy model, illustrate and explain how…

A: The balance of trade is the difference between the monetary value of exports and imports of a nation…

Q: Q2-9 The shape of the curve that shows the effect of currency depreciation upon a country's current…

A: The depreciation of any country's money will prompt a fall yet to be determined of exchange at first…

Q: 26-Which of the following increases the demand for foreign exchange? a. Import of capital to a…

A: The exchange rate determines the rate at which one currency can be traded for another. Therefore, it…

Q: State whether each of the following events involves a financial flow to the Mexican economy or a…

A: Before we answer the above question, let us first understand some key concepts regarding financial…

Q: Explain four factors why China is among the huge recipients of foreign direct investment.

A: Foreign direct investment is the type of investment made by one country into the business of another…

Q: State whether each of the following events involves a financial flow to the Mexican economy or a…

A: Financial flows refer to the movement of financial capital, such as money for investments from…

Q: Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is…

A: Given: National Savings =200  Government Budget Deficit=-50

Q: An increase in the real exchange rate ​(real depreciation of domestic currency​) will result​ in:…

A: an exchange rate is the rate at which one currency will be exchanged for another currency.

Q: Who would benefit if the exchange rate with yen (in U.S. dollars) increased (i.e. one dollar can buy…

A: Exchange rate refers to the rate at which a country’s currency can be traded for another country’s…

Q: Derive aggregate demand curve for open economy working under fixed exchange rate and flexible…

A: Meaning of Aggregate Demand and Aggregate Supply: The term aggregate demand refers to the…

Q: Question 3 Illustrate and explain the impact on the real exchange rate and the trade balance due…

A: Hi Student, thanks for posting the question. As per the guideline we are providing answers for the…

Q: INSTRUCTIONS: For each of the following, explain the effect on a) current account OR capital account…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: An increase in capital inflows in the United States will result in a(n) foreign currency and a(n).…

A: Capital flows have an effect on the domestic currency exchange rate as well as the foreign currency…

Q: Explain why you agree or disagree with each of the following statements: a. “A nation’s currency…

A:

Q: Suppose that in a small open economy with floating exchange rate system the government reduces the…

A: When exchange rate increases then there is a decrease in export and increase in import.

Q: sustainable for a small open economy? capital controls, independent domestic monetary policy, fixed…

A: Answer in step 2

Q: For each of the following, explain the effect on a) current account OR capital account b) balance of…

A: Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts for…

Q: (Income Identity) Y = C+I+G+ NX Y = 6,000 G = 1,200 T = 1,000 C = 250+0.75(Y –T) 1 = 1,000 – 100r NX…

A: The Given Informations are Y=C+I+G+NX C= 250+0.75(Y-T) Y=6000 G= 1200 T=1000 I= 1000-100r…

Q: Assuming there is an increase in private saving in a small open economy, describe the potential…

A: Answer: Correct option: (b) Net exports increase and the real exchange rate depreciates Explanation:…

Q: What is the impact on the real exchange rate and the trade balance due to: (a) A successful…

A: Hello. Since you have posted multiple parts of the question and not specified which part of the…

Q: Draw a correctly labeled graph of the foreign exchange market for dollars between US and Japan. Show…

A: Non-residents net purchases of local assets are referred to as capital inflows. Capital outflows are…

Q: Imagine that the U.S. economy finds itself in the following situation: a government budget deficit…

A: Given information:

Q: A government official announces a new policy. The country wishes to eliminate its trade deficit, but…

A: An administration official declares another strategy. The goal is to take out its import/export…

Q: 2-16 In a system of fixed exchange rates, the automatic balance-of-payments adjustment process for a…

A: *Answer:

Q: Imagine that the economy of Germany finds itself in the following situation: the government budget…

A: The national investment and national saving identity explains the relationship between the total…

Q: If the U.S government establishes a investment tax credit rule, this rule subsidizes domestic…

A: An investment tax credit is a method where people who invest are granted a tax credit. It subsidizes…