Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
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Chapter 13, Problem 8RQ
To determine
To know: Effect on net exports by expansionary fiscal
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Assuming the economy is operating below its potential output, what is the impact of an increase in net exports on real GDP ? Why is it difficult, if not impossible, for a country to boost its net exports by increasing its tariffs during a global recession?
How does an increase in foreign income affect domestic aggregate expenditures and demand?
Suppose exports increase.
According to the shares of spending model, what would happen to interest rates, consumption, investment, and net exports in the long run?
Chapter 13 Solutions
Macroeconomics (9th Edition)
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- How are the following events likely to influence the level of American net exports? 1) Consumers in Europe become more prosperous, while the United States is mired in a recession. 2) The United States encounters a period of unexpectedly high inflation.arrow_forwardGiven flexible exchange rates and perfect capital mobility, what will be effect of an expansionary fiscal policy on output and price? Use IS-LM and AD-SRAS-LRAS diagrams to answer this question.arrow_forwardFrom the following information, calculate the equilibrium values of Income (Y), interest rate (i) investment (I), net exports (NX), and money demand (md).arrow_forward
- If young business professionals in America suddenly decide that driving German-made cars (=produced in Germany) is an important status symbol, net exports will tend to _____ causing aggregate demand to _____. Group of answer choices fall; rise fall; fall rise; fall rise; risearrow_forwardOne reason for an increase in aggregate demand (AD) on the net exports side is A a rise in the expected rate of return. B a rise in interest rates. C an increase in foreign demand. D an increase in the relative price of U.S. goods.arrow_forwardIf a change in the real interest rate has no effect onplanned investment spending or net exports, what doesthis imply about the slope of the IS curve?arrow_forward
- If Australia, which imports goods from the United States, went into recession, we should expect that U.S. net exports would fall, making the aggregate demand shift right. fall, making the aggregate demand shift left. rise, making the aggregate demand shift right. rise, making the aggregate demand shift left.arrow_forwardIf countries that imported from the United States went into recession, we expect that U.S. net exports would _________ rise, making the aggregate demand shift right. rise, making aggregate supply shift left. fall, making aggregate supply shift right. fall, making aggregate demand shift left.arrow_forwardWhat is J-curve? Explain the behavior of net exports represented by the J curve.arrow_forward
- Someone Please Answer this question ASAP without explanantionA reduction in U.S net exports would shift U.S. aggregate demand A. leftward. In an attempt to stabilize the economy, the government could raise taxes. B. leftward. In an attempt to stabilize the economy, the government could cut taxes. C. rightward. In an attempt to stabilize the economy, the government could cut taxes. D. rightward. In an attempt to stabilize the economy, the government could raise taxes.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_forwardIf investment spending on net adds to the capital stock, we would expect that a-at first aggregate supply increases and later aggregate demand increases b-output would decline c-both aggregate demand and aggregate supply increase simultaneously d-at first aggregate demand increases and later aggregate supply increasesarrow_forward
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