NX-500-500e r=r*=5 Suppose the world interest rate drop from r=5 to 2percent (assume government G=750). Find the national saving, investment, trade balance, capital outflow and equilibrium
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- Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 of Germanys GDP; private savings is 20 of GDP; and physical investment is 18 of GDP. Based on the national saving and investment identity, what is the current account balance? If the government budget surplus falls to zero, how will this affect the current account balance?If a country is running a government budget surplus, why is (T - G) on the left side of the saving-investment identity?provides some hypothetical data on macroeconomicaccountsforthreecountriesrepresented by A, B, and C and measured in billions of currency units. In Table, private household saving is SH, tax revenue is T, government spending is G, and investment spending is I. a. Calculate the trade balance and the net inflow of foreign saving for each country. b. State whether each one has a trade surplus or deficit (or balanced trade). c. State whether each is a net lender or borrower internationally and explain.
- 1. What is the difference between economic growth and economic development? 2. What is unemployment, and what are the labor market indicators? 3. What is the difference between inflation and deflation? 4. Whatisaggregatedemandandaggregatesupply? 5. Whatiscurrencyappreciationandcurrencydepreciation? 6. What is the flexible exchange rate and fixed exchange rate? 7. What is balance of trade and balance of payment? 8. What is trade surplus, trade deficit, and balanced trade? 9. What is fiscal policy and what is monetary policy? Question 2-In 5 to 10 lines, write about the great depression of the 1930's. Question 2 You just need to carry out research on your own.1. What explains how the dollars per euro exchange rate will change in the future if the exchange rate is wxpected to rise. 2. What is addressed by the USMCA? 3. Country A has a GDP of 60,000,000 and country B has a per capita of 2,000. If the populations of countries a and b are 40,000 and 20,000 respectively, which country is most developed based on per capita GDP? 4. how can a difference in Gini coefficients for the United States and china be interpreted 5. which of the following trends have followed globalization?Suppose that government of Pakistan is considering an investment tax credit.i. How would this policy affect national saving, domestic investment, netcapital outflow, the real interest rate, the real exchange rate, and the tradebalance? Use graphs to explain your answer. ii. The representatives of several large exporter firms oppose the policy. Whymight that be the case? Explain in words.
- Suppose that Americans decide to increase theirsaving.a. If the elasticity of U.S. net capital outflow withrespect to the real interest rate is very high, willthis increase in private saving have a large orsmall effect on U.S. domestic investment?b. If the elasticity of U.S. exports with respect to thereal exchange rate is very low, will this increase inprivate saving have a large or small effect on theU.S. real exchange rate?A case study in the chapter analyzed purchasingpower parity for several countries using the pricc ofBig Macs. Here arc data for a few more countries: a. For each country, compute the predicted exchangerate of the local currency per U.S. dollar. (Recallthat the U.S. price o( a Big Mac was $4.93.)b. According to purchasing-power parity, what is thepredicted exchange rate between the Hungarianforint and the Canadian dollar? What is the actualexchange rate?c. How well docs the theory of purchasing-powerparity explain exchange rates?Which of the following is a possible impact of a global saving glut on a small OPEN economy? Domestic savings would equal to domestic investment no matter how the real interest rate changes. O The real interest rate would decrease with the world real interest rate. Domestic investment would decrease while domestic savings would increase. O The real interest rate would stay the same.
- Which of the following countries would you expect to have intertemporal produc- tion possibilities biased toward current consumption goods, and which would be biased toward future consumption goods? a. A country like Egypt that has discovered large reserves of natural gas that can be exploited with massive investments. CHAPTER 6 · The Standard Trade Model 175 b. A country like India that is catching up technologically due to massive out- sourcing services, especially from wealthy countries. c. A country like Germany or the United States where a ban on immigration means a limited inflow of immigrants. d. A country like Indonesia that started developing its infrastructure to make industries more productive and cost-efficient. e. A country like the Netherlands that aims to reduce with low investment in the use of biofuels. energy and gas consumptionModel of an open economy without government. Given is:C = 100 + 0,7YI = 200X = 100Q = 0 + 0.1Ya. Calculate Y0, the trade balance (Export minus Imports) and the multiplierb. How will Y0 and the trade balance change when investments increase by 100?c. How will Y0 and the trade balance change when exports increase by 100?d. How will Y0 and the trade balance change when autonomous imports increasefrom 0 to 100?e. Compare Y0, the trade balance, and the multiplier found in a) with the valuesyou obtain for a more open economy with exports of 500 and a marginalpropensity to import of 0.5.State whether each of the following events Involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy: Mexico Imports sen4ces from Japan Mexico exports goods to Canada U.S. investors receive a return from past financial investments in Mexico
