Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 23, Problem 46P

Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 % of Germany’s GDP; private savings is 2 0 % of GDP; and physical investment is 18 % of GDP.

  1. Based on the national saving and investment identity, what is the current account balance?
  2. If the government budget surplus falls to zero, how will this affect the current account balance?

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Q.1.10 which of the following statements is correct? (1) When a British firm invests in a bicycle manufacturing facility in South Africa, the amount concerned is entered as an inflow on the current account of the South African balance of payments. (2) When someone purchases a second-hand car, the transaction is included in the calculation of GDP in the year the sale took place. (3) A deficit on the current account of the balance of payments indicates that the country exported more than it imported during the period in question. (4) In the base year, the value of nominal GDP is equal to the value of real GDP.
You have the following annual figures for the New Zealand economy.             Investment expenditure                      $42.5 billion            Government savings                           -$1.7 billion The current account balance is not zero.  In fact the current account deficit is $6.0 billion.  What is New Zealand's actual private sector savings figure?  $____billion (use 1 d.p.).
Suppose an economy’s national accounts are GNP = 100, C = 70, I = 40, G = 20 and EX = 20 where GNP is gross national product, C is consumption, I is investment, G is government spending, and EX is exports. Using the national income identity, find the value of imports (IM). What is the current account balance? What is the national savings rate (note: saving rate = S/Y)? What would the government, private, and total savings rate be if the government reduced taxes T = 10 while the other variables remain unchanged?

Chapter 23 Solutions

Principles of Economics 2e

Ch. 23 - Using the national savings and Investment...Ch. 23 - If a country is running a government budget...Ch. 23 - What determines the size of a countrys trade...Ch. 23 - If domestic Investment increases, and there is no...Ch. 23 - Why does a recession cause a trade deficit to...Ch. 23 - Both the United States and global economies are...Ch. 23 - For each of the following, indicate which type of...Ch. 23 - How did large trade deficits hurt the East Asian...Ch. 23 - Describe a scenario in which a trade surplus...Ch. 23 - The United States exports 14 of GDP while Germany...Ch. 23 - Explain briefly whether each of the following...Ch. 23 - If imports exceed exports, is it a trade deficit...Ch. 23 - What is included in the current account balance?Ch. 23 - In recent decades, has the U.S. trade balance...Ch. 23 - Does a trade surplus mean an overall inflow of...Ch. 23 - What are the two main sides of the national...Ch. 23 - What are the main components of the national...Ch. 23 - When is a trade deficit likely to work out well...Ch. 23 - Does a trade surplus help to guarantee strong...Ch. 23 - What three factors will determine whether a nation...Ch. 23 - What is the difference between trade deficits and...Ch. 23 - Occasionally, a government official will argue...Ch. 23 - A government official announces a new policy. The...Ch. 23 - If a country is a big exporter, is it more exposed...Ch. 23 - If countries reduced trade barriers, would the...Ch. 23 - Is it better for your country to be an...Ch. 23 - Many think that the size of a trade deficit is due...Ch. 23 - If you observed a country with a rapidly growing...Ch. 23 - Occasionally, a government official will argue...Ch. 23 - What is more important, a countrys current account...Ch. 23 - Will nations that are more involved in foreign...Ch. 23 - Some economists warn that the persistent trade...Ch. 23 - In 2001, the United Kingdoms economy exported...Ch. 23 - Imagine that the U.S. economy finds itself in the...Ch. 23 - Table 23.7 provides some hypothetical data on...Ch. 23 - Imagine that the economy of Germany finds itself...
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