Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 13, Problem 2CQQ
To determine
Exchange rate between Paris and New York.
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In an open economy, national saving equalsdomestic investmenta. plus the government’s budget deficit.b. minus the net exports of goods and services.c. plus the net outflow of capital.d. minus foreign portfolio investment
Multiple choice question
In a small economy the difference between saving and investment determines:
a. real exchange rate.b. net exports and net capital outflow.c. taxes.d. government expenditures.
A country’s investment is 8, its government spends 10 and raises 9 in taxes, and its current account is -2. Find the country’s private saving.
Find the country’s public saving.
How much net investment does the country receive from the rest of the world?
Chapter 13 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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- Discuss the role of budget surpluses and trade surpluses in national saving and investmentarrow_forwardHolding other things constant, an increase in anation’s interest rate reducesa. national saving and domestic investment.b. national saving and the net capital outflow.c. domestic investment and the net capital outflow.d. national saving onlyarrow_forwardExplain the difference between foreign direct investment (FDI) and foreign portfolio investment (FPI)? Explain which one is more useful to accelerate economic growth of home country.arrow_forward
- Suppose that GDP is equal to 1,000, national saving is equal to 200, the current account deficit is equal to 100, and the government budget deficit is equal to 50. Private savings must equal （ ）arrow_forwardIn an open economy, if the level of net exports rises, it must be the case thata) there is an increase in saving.b) there is an increase in investment.c) the value of saving less investment must fall.d) none of the above. Why the correct answer is D?arrow_forwardSelect all that are true given an increase in foreign investment from the domestic economy: A. Domestic economic growth (GDP) increases, ceteris paribus B. Investment from the domestic economy to the foreign economy decreases C. The domestic currency depreciatesarrow_forward
- You have the following annual figures for the New Zealand economy. Investment expenditure $42.5 billion Government savings -$1.7 billion If the current account balance was equal to zero then private savings must be $____billon (use 1 d.p.).arrow_forwardcountry has domestic investment of $200 billion. Its citizens purchase $600 billion of foreign assets and foreign citizens purchase $300 billion of its assets. What is national saving? a. $500 billion b. $400 billion c. $800 billion d. $600 billtionarrow_forwardIn an open economy the national income identity shows that: Where S stands for national savings, I for investment spending and NX for the trade balance. Carefully state this identity in words and explain why it is expected to hold.arrow_forward
- In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 billion, and net capital outflow equals $225 billion. What is national saving?arrow_forwardwhat is the importance of Foreign direct investment (FDI) to an agriculture-producing country what are some of the macroenvironmental factors that can affect the lucrativeness of the an agriculture-producing country to foreign investors what are some challenges that investors face in doing business in an agriculture-producing country what are some possible strategies that can be used to make an agriculture-producing country attractive to foreign investors.arrow_forwardDescribe the difference between foreign direct investment and foreign portfolio investment. Who is more likely to engage in foreign direct investment – a corporation or an individual investor? Who is more likely to engage in foreign portfolio investment?arrow_forward
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