EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 39, Problem 9RQ
To determine
The impact of the boom in the US related to recession in trading partners.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that an economy is experiencing large trade deficits. According to pass-through effects, a
devaluation would always improve trade balance, when:
O
both demand for domestic imports and exports are perfectly inelastic.
both supply of domestic imports and exports are perfectly inelastic.
the demand for domestic imports is perfectly inelastic and the supply of domestic exports is perfectly
inelastic.
the supply of domestic imports is perfectly inelastic and the demand for domestic exports is perfectly
inelastic.
In periods of rapid U.S. growth, the rapid growth usually adds to large U.S. trade deficits by:
O increasing U.S. national income, which increased U.S. imports.
O reducing real interest rates in the United States.
O increasing U.S. national income, which decreased U.S. exports.
O increasing U.S. tax revenues and reducing the Federal budget deficit.
If the U.S. current-account deficit in 2021 is $965.4495 billion,
a. the U.S. capital-account deficit in 2021 will be $965.4495 billion
O b. the U.S. capital-account surplus in 2021 will be $965.4495 billion
O c. we have no way to know, from the information contained in the question, what the U.S. capital-account
will be in 2021
O d. DO NOT CHOOSE THIS ANSWER.
Chapter 39 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 39.1 - Prob. 1QQCh. 39.1 - Prob. 2QQCh. 39.1 - Prob. 3QQCh. 39.1 - Prob. 4QQCh. 39 - Prob. 1DQCh. 39 - Prob. 2DQCh. 39 - Prob. 3DQCh. 39 - Prob. 4DQCh. 39 - Prob. 5DQCh. 39 - Prob. 6DQ
Ch. 39 - Prob. 7DQCh. 39 - Prob. 8DQCh. 39 - Prob. 9DQCh. 39 - Prob. 10DQCh. 39 - Prob. 11DQCh. 39 - Prob. 1RQCh. 39 - Prob. 2RQCh. 39 - Prob. 3RQCh. 39 - Prob. 4RQCh. 39 - Prob. 5RQCh. 39 - Prob. 6RQCh. 39 - Prob. 7RQCh. 39 - Prob. 8RQCh. 39 - Prob. 9RQCh. 39 - Prob. 10RQCh. 39 - Prob. 1PCh. 39 - Prob. 2PCh. 39 - Prob. 3PCh. 39 - Prob. 4PCh. 39 - Prob. 5P
Knowledge Booster
Similar questions
- If the United States had a capital and financial account deficit of $50 billion, we could say the United States had Please choose one: O a net imports of $50 billion O b.a current account deficit of $50 billion O c net foreign borrowing of $50 billion OD. acquired net foreign assets of $50 billion.arrow_forwardThe UK has been running large trade account deficits for many years. According to the equation NX = S+ (T-G) - I, the UK's trade deficit is found to be correlated with O significant rise in public savings but fall in private savings O significant rise in private savings but fall in public savings O significant deterioration in both the private and public savings for many years O significant rise in investmentarrow_forwardthis question has three questions . What proportion of this country’s 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%. 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 country’s 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?arrow_forward
- Question 12 Other things equal, which of the statements below is false? O a. A trade deficit will keep GDP constant if all imported goods and services are sold at cost in the domestic economy O b. A trade deficit will increase GDP if all imported goods and services are sold at below cost in the domestic economy Oc. A trade deficit will decrease GDP if all imported goods and services are sold at below cost in the domestic economy O d. A trade deficit will increase GDP if all imported goods and services are sold at above cost in the domestic economy rornonsearrow_forward19. In balance-of-payments accounting, the sale of a foreign production facility by a SA firm is a item in the SA balance of payments; the deposit of funds in a foreign bank account by a SA citizen item in the SA balance of payments. Debit; also is a debit Debit; is a credit Credit, is a debit Credit also is a credit 20. The table below shows a section of the national accounts for a small country in 2018. Answer the question that follows using the information provided in the table. Consumption expenditure Government expenditure 9 800 3 500 Depreciation 500 2 200 Exports Imports Gross capital formation (investment) Primary income payments Primary income receipts 1900 2 500 300 200 The value of Gross Domestic Product (GDP) is: A 16 100 B 19 900 16 600 15 600 A,arrow_forward14. Consider a country in the two-period analysis of trade imbalances experiencing a trade deficit in period I and no GNP growth between the two periods. Assuming that the country finances its trade deficits through borrowing in period I and repaying the entire loan in period 2 and the extra funds in period I are not directed into domestic investment, which of the following will be observed? a. The average standard of living in the country in period 2 will decline. b. The average standard of living in the country in period I will decline. c. The average standard of living in the country in period 2 will improve. d. The average standard of living in the country in period I will remain unaffected. e. The average standard of living in the country will remain stable over the two periods.arrow_forward
- Suppose the Australian dollar floats against the US dollar and the demand for Australian dollars in the foreign exchange market is given by Q = 100 - 50E where Q denotes the quantity of AUD and E denotes the nominal exchange rate expressed in USD per AUD. The supply of Australian dollars is given by Q = 20 + 50E. What is the equilibrium nominal exchange rate? O 0.80 O 1.00 O 1.20 O 1.50arrow_forward16. The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariffwill reduce South Africa's trade deficit A Because exports will be promoted and imports cannot possibly changeB Because imports will be reduced and exports cannot possibly changeC Only if the tariff has no impact on South Africa's spending or incomeD Only if the tariff leads to increased income in South Africa relative to its spendingarrow_forwardSuppose that the government of China is currently fixing the exchange rate between the U.S. dollar and the Chinese yuan at a rate of $1 = 6 yuan. Also suppose that at this exchange rate, the people who want to convert dollars to yuan are asking to convert $10 billion per day of dollars into yuan, while the people who are wanting to convert yuan into dollars are asking to convert 36 billion yuan into dollars. What will happen to the size of China’s official reserves of dollars? a. Increase. b. Decrease. c. Stay the same.arrow_forward
- Suppose a country has a floating exchange rate and no capital controls. It also has a recessionary gap. It tackles this with an expansionary fiscal policy. In the final equilibrium people expect its exchange rate to stay at its new value. Which of the following statements is false? a) There will be an initial increase in demand, probably government purchases and consumer spending. O b) As demand increases, incomes and money demand start to increase, causing a rise in the interest rate and, in turn, in the exchange rate. c) The interest rate must end up at its initial value, so money demand must return to its original level. d) Output will end up higher than it was initially.arrow_forward8. For this question, assume that equilibrium output is determined in the ZZ - Y diagram. Further assume that policy makers' goals are (1) to achieve balanced trade (i.e. NX = 0 ); and (2) to achieve a target level of output, say Y'. Now, suppose that the initial level of equilibrium output is equal to Y' (ie.,Y = Y") l ofo and that a trade deficit exists at this initial level of output. Which of the following policy actions would most likely enable the policy makers to achieve their two goals simultaneously? A. a reduction in government spending B. convince the country's trading partners to pursue policies what will cause an increase in foreign income (Y*) C. a reduction in taxes D. a simultaneous increase in government spending and reduction in the real exchange rate E. none of the abovearrow_forwardE3 According to the National Savings and Investment Identity framework, if the US runs a $250 billion trade deficit with another country: 1. private savings from US households and firms also equals $250 billion. 2, inflows of foreign investment from that country also equal $250 billion. 3. tax revenue in the US must increase by $250 billion to pay for the trade deficit. 4. government borrowing must increase by $250 billion to pay for the deficit.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax