MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 11, Problem 6DQ
To determine
Impact of an increase in net export on real GDP (Gross Domestic Product ).
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Chapter 11 Solutions
MACROECONOMICS W/CONNECT
Ch. 11.2 - Prob. 1QQCh. 11.2 - Prob. 2QQCh. 11.2 - Prob. 3QQCh. 11.2 - Prob. 4QQCh. 11.7 - Prob. 1QQCh. 11.7 - Prob. 2QQCh. 11.7 - Prob. 3QQCh. 11.7 - Prob. 4QQCh. 11 - Prob. 1DQCh. 11 - Prob. 2DQ
Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
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- Suppose you own a toy store in the United States, where there is high demand for the PlayNation 3, a video game console. Because of this, you spend $15,000 to increase your inventory of the gaming system, which is manufactured by Zony, a Japanese company, in Japan. Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive, regardless of the direction of change. Magnitude of Change Direction of Change (Dollars) Exports Imports Net Exports Because of the identity equation that relates to net exports, the in U.S. net exports is matched by in U.S. net capital outflow. Which of the following is an example of how the United States might be affected in this scenario? Check all that apply. Zony exchanges the $15,000 for yen at the local bank, which then uses the…arrow_forwardHow does an increase in foreign income affect domestic aggregate expenditures and demand?arrow_forwardDiscuss which of the following fall into the categories of consumption, investment, government expenditure and net exports from the Y=C+I+G+NX(X-M) identity,and whether the impact is to increase or decrease GDP a) your firm sells meat to Indonesia b) the fish and chips shop down the road buys fish to make meals for dinners c) the same shop buys a deep fryer to fry fish for meals all 3 questions to be solvedarrow_forward
- In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?arrow_forwardConsider a small open economy and suppose the global interest rate (r*) is 8%, the investment amount is governed by I(r) = 15M – 0.5r, and domestic savings are 12M. Sketch the supply and demand curve for S,I,r* and illustrate net exports or imports. Find the numeric value of net exports.arrow_forwardSuppose that the AD-SRAS-LRAS diagram for the economy is starting in a long-run equilibrium. Now if there is a recession in a trading partner country, which causes domestic aggregate demand to fall. What happens to the domestic output and the price level in the short run and long run, respectively? Elaborate on your answers in words.arrow_forward
- Using the data given in Table 1, compute the net exports. Briefly discuss your result and indicate whether there is a trade surplus or a trade deficit in the current account.arrow_forwardUse the AD/AS framework to explain how the economy adjusts in the short run and the long run to each of the following (assuming that the economy starts at potential GDP with no spare Capacity and a given price level): a) World energy prices rise and then settle at a new higher level, and this raises input prices for all domestic producers. b) There is a one-off fall in export demand which stays at the new lower level. c) The monetary policy makers lower their official interest rate and hold it at the new lower level. d)The government raises its current spending and keeps it at the new level. e)Say what might have happened to the other components of aggregate demand when the economy has adjusted to the change In d) in the long run.arrow_forwardAt an aggregate output level of $400 billion what is aggregate savings?arrow_forward
- Under a closed system, when net exports equals 0, what must be true about investment spending? A Investment Consumption B Investment = Savings (C) Investment = Government Spending D) Investment Government spending - taxesarrow_forwardThe graph below is associated with a hypothetical country. Consider a decrease in aggregate demand (AD). Specifically, aggregate demand shifts to the left from AD to AD₂, causing the quantity of output demanded to fall at each price level. For instance, at a price level of 140, output is now $200 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 8 90 0 100 AD₁ AD₂ 200 300 400 500 600 OUTPUT (Billions of dollars): 700 800 ?arrow_forwardUsing the ZZ/Y and NX graphs, illustrate graphically and explain what effect a decrease in consumer confidence will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria. zz shifts downwards?arrow_forward
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