Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 10, Problem 11SCQ
Using the national savings and Investment identity, explain how each of the following changes (ceteris paribus) will Increase or decrease the trade balance:
- A lower domestic savings rate
- The government changes from running a budget surplus to running a budget deficit
- The rate of domestic Investment surges
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Only one of the following statements about the trade surplus is correct. Which one is it?
a. the government should always strive for a trade surplus and a healthy inflow of foreign capital
b. the government generating a trade surplus is better than increasing foreign capital inflows
c. increasing foreign capital investment is better than generating a trade surplus
d. generating a trade surplus and an overall net inflow of capital is impossible
A mercantilist nation is focused on achieving a favorable balance of trade. To do this, it aims to export more than it imports, thereby accumulating wealth. Considering this goal, which of the following scenarios best illustrates a successful mercantilist policy?
A) The nation imports luxury goods in large quantities.B) The nation exports goods equivalent to its imports.C) The nation's exports exceed its imports, leading to an influx of gold and silver.D) The nation focuses on self-sufficiency and reduces both imports and exports.
Policies that .... tend to cause ......
a) decrease investment / a trade surplus
b) increase investment / a trade surplus
c) increase investment / a trade deficit
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Chapter 10 Solutions
Principles of Macroeconomics 2e
Ch. 10 - If foreign investors buy more U.S. stocks and...Ch. 10 - If the trade deficit of the United States...Ch. 10 - State whether each of the following events...Ch. 10 - In what way does comparing a countrys exports to...Ch. 10 - At one point Canadas GDP was 1,800 billion and its...Ch. 10 - The GDP for the United States is 18,036 billion...Ch. 10 - Why does the trade balance and the current account...Ch. 10 - State whether each of the following events...Ch. 10 - How does the bottom portion of Figure 23.3,...Ch. 10 - Explain the relationship between a current account...
Ch. 10 - Using the national savings and Investment...Ch. 10 - If a country is running a government budget...Ch. 10 - What determines the size of a countrys trade...Ch. 10 - If domestic Investment increases, and there is no...Ch. 10 - Why does a recession cause a trade deficit to...Ch. 10 - Both the United States and global economies are...Ch. 10 - For each of the following, indicate which type of...Ch. 10 - How did large trade deficits hurt the East Asian...Ch. 10 - Describe a scenario in which a trade surplus...Ch. 10 - The United States exports 14 of GDP while Germany...Ch. 10 - Explain briefly whether each of the following...Ch. 10 - If imports exceed exports, is it a trade deficit...Ch. 10 - What is included in the current account balance?Ch. 10 - In recent decades, has the U.S. trade balance...Ch. 10 - Does a trade surplus mean an overall inflow of...Ch. 10 - What are the two main sides of the national...Ch. 10 - What are the main components of the national...Ch. 10 - When is a trade deficit likely to work out well...Ch. 10 - Does a trade surplus help to guarantee strong...Ch. 10 - What three factors will determine whether a nation...Ch. 10 - What is the difference between trade deficits and...Ch. 10 - Occasionally, a government official will argue...Ch. 10 - A government official announces a new policy. The...Ch. 10 - If a country is a big exporter, is it more exposed...Ch. 10 - If countries reduced trade barriers, would the...Ch. 10 - Is it better for your country to be an...Ch. 10 - Many think that the size of a trade deficit is due...Ch. 10 - If you observed a country with a rapidly growing...Ch. 10 - Occasionally, a government official will argue...Ch. 10 - What is more important, a countrys current account...Ch. 10 - Will nations that are more involved in foreign...Ch. 10 - Some economists warn that the persistent trade...Ch. 10 - In 2001, the United Kingdoms economy exported...Ch. 10 - Imagine that the U.S. economy finds itself in the...Ch. 10 - Table 23.7 provides some hypothetical data on...Ch. 10 - Imagine that the economy of Germany finds itself...
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Similar questions
- Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy. a. Living in an especially large country b. Having a domestic investment rate much higher than the domestic savings rate c. Having many other large economies geographically nearby d. Having an especially large budget deficit e. Having countries with a tradition of strong protectionist legislation shutting out importsarrow_forwardCompare and contrast changes in the value of the US Dollar on the trade deficitarrow_forwardOccasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad.Explain why such a statement is economically impossible.arrow_forward
- Please define trade surplus, deficit and balance concepts. What currency strategy would you suggest to resolve a trade deficit problem? Please explain your answer with a numerical example.arrow_forwardIf the United States imports more than it exports, it will have a: trade surplus, trade deficit, import balance, trade balancearrow_forward
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