MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 21, Problem 2RQ
To determine
The balance on capital and financial accounts.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Suppose that Argentina's dollar-denominated external assets and liabilities are $10 billion and $100 billion, respectively, and its Argentine peso-denominated external assets are 70 billion pesos (P) and peso-denominated external liabilities are 50 billion pesos (P). Suppose further that Argentina fixes its exchange rate at P1.5 = $US1.
Ā
a) What is the peso value of Argentina's total external wealth? Is it a net debtor or creditor?
Ā
b) Suppose that Argentina changes its exchange rate to P2.3 = $US1. How does the external wealth of Argentina change when this occurs?
this question has three questions . What proportion of this countryās total gross capital formation (or investment) can be financed from national savings, and what part must be financed from external resources? What are the various forms these external resources could take? show in graph how the current account got a deficit of 12% GDP and the budget deficit of 3%.
Ā
Suppose a country has a large current account deficit (in the vicinity of 12% of GDP). It has a gross capital formation rate of 28% of GDP. The country has an overall budget deficit of 3% of GDP. The share of Household and NPISHs Final Consumption Expenditure is 68% of GDP and that of General Government Final Consumption Expenditure is 12%. What proportion of this countryās total gross capital formation (or investment) can be financed from national savings and what part must be financed from external resources? What are the various forms these external resources could take?
Suppose that currency market for Mexican pesos and Canadian dollars is initially in equilibrium, with 10 pesos trading for 1 Canadian dollar.Ā Because of a new trade agreement, there has been a shift in the demand for pesos due to a sudden increase in the capital inflow from Canada to Mexico.
What is the effect of the capital inflow on the exchange rate of pesos for Canadian dollars?Ā Explain and show grahically.Ā On your graph, Quantity of Canadian dollars should be on the vertical axis and the Exchange rate (Mexican pesos per Canadian dollar should be on the vertical axis.
Chapter 21 Solutions
MACROECONOMICS (LL)
Ch. 21.1 - Prob. 1QQCh. 21.1 - Prob. 2QQCh. 21.1 - Prob. 3QQCh. 21.1 - Prob. 4QQCh. 21.A - Prob. 1ADQCh. 21.A - Prob. 1ARQCh. 21.A - Prob. 1APCh. 21 - Prob. 1DQCh. 21 - Prob. 2DQCh. 21 - Prob. 3DQ
Ch. 21 - Prob. 4DQCh. 21 - Prob. 5DQCh. 21 - Prob. 6DQCh. 21 - Prob. 7DQCh. 21 - Prob. 8DQCh. 21 - Prob. 9DQCh. 21 - Prob. 10DQCh. 21 - Prob. 11DQCh. 21 - Prob. 1RQCh. 21 - Prob. 2RQCh. 21 - Prob. 3RQCh. 21 - Prob. 4RQCh. 21 - Prob. 5RQCh. 21 - Prob. 6RQCh. 21 - Prob. 7RQCh. 21 - Prob. 8RQCh. 21 - Prob. 9RQCh. 21 - Prob. 10RQCh. 21 - Prob. 1PCh. 21 - Prob. 2PCh. 21 - Prob. 3PCh. 21 - Prob. 4PCh. 21 - Prob. 5P
Knowledge Booster
Similar questions
- Only typed answerĀ Suppose the dollar interest rate and the pound sterling interest rate are theā same, 5 percent per year. Ā Suppose the expected future exchangeā rate, ā$1.89 perā pound, and the US interest rate remainā constant, whileā Britain's interest rate rises to 7 percent per year. What is the new equilibriumā dollar/pound exchangeā rate? Ā New equilibrium exchange rate is ā$ here per pound.arrow_forward8. Suppose that last year, the nominal exchange rate between the Japanese yen and the British pound was Ā„150.0 per Ā£1.0, one unit of Japanese output cost Ā„1300, and one unit of British output cost Ā£8.0.a. What was the real exchange rate between the U.K. and Japan last year, expressed as the cost of British output (i.e. ā the quantity of Japanese output that exchanges for 1 unit of British output)? In which country were goods more expensive last year?arrow_forwardAdvanced Analysis:Ā Refer to the following table, in whichĀ QdĀ is the quantity ofĀ loonies demanded,Ā PĀ is the dollar price of loonies,Ā QsĀ isĀ the quantity of loonies supplied in year 1, andĀ Qs'Ā is theĀ quantity of loonies supplied in year 2. All quantities are in billions. Further, assume that the exchange rate is fixed at 110. Ā Qd P Qs Qs' 10 125 30 20 15 120 25 15 20 115 20 10 25 110 15 5 Ā Instructions:Ā Enter your answers as whole numbers. Ā a. In year 1, what would be the minimum initial size of the U.S. reserve of loonies such that it could maintain the peg throughout the year? Ā Ā Ā Ā Ā Ā Ā billion loonies Ā Ā b. What about the minimum initial size that would be necessary at the start ofĀ year 2? Ā Ā Ā Ā Ā Ā Ā billion loonies Ā Ā Ā Ā Ā Ā Next, consider only the data for year 1. Ā c. What peg should the United StatesĀ set if it wants the fixed exchange rate to increase the domestic money supply by $1.2 trillion? Ā Ā Ā Ā Ā Ā Ā dollars per looniearrow_forward
Recommended textbooks for you
- Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Macroeconomics (MindTap Course List)EconomicsISBN:9781285165912Author:N. Gregory MankiwPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:Cengage Learning