Homework Answers
The second option is correct ie. rise; remain unchanged
Increase in taxes would result in increase in current account but savings would remain unchanged
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If there is an increase in taxes on business firms in a small open economy, it...
1. Consider a small open economy where an increase in business confidence leads to an increase...
1. Consider a small open economy where an increase in business confidence leads to an increase in investment expenditure. Examine the loanable funds market and show what happens to Investment, National Saving, real interest rates, capital flows and the current account (net exports). Examine the market for foreign exchange and show what happens to the real exchange rate. Now consider that the country is not so small, what else might change, how might your answer differ?
1. Consider a small open economy where an increase in business confidence leads to an increase...
1. Consider a small open economy where an increase in business confidence leads to an increase in investment expenditure. Examine the loanable funds market and show what happens to Investment, National Saving, real interest rates, capital flows and the current account (net exports). Examine the market for foreign exchange and show what happens to the real exchange rate. Now consider that the country is not so small, what else might change, how might your answer differ?
Recall the small open economy model we considered, and answer the following questions for a small...
Recall the small open economy model we considered, and answer the following questions for a small open economy named Atlas. For each of the slots labeled (a) through (d), indicate whether the policy listed to the leftmost column causes the variable listed in the upper row to rise, fall, or remain unchanged, and provide an explanation for your answer in each case. (13 pts) Atlas domestic investment (3pts) Contractionary a fiscal in Atlas Atlas net capital outflow (3pts) b Atlas...
3. Recall the small open economy model we considered, and answer the following questions for a...
3. Recall the small open economy model we considered, and answer the following questions for a small open economy named Atlas. For each of the slots labeled (a) through (d), indicate whether the policy listed to the leftmost column causes the variable listed in the upper row to rise, fall, or remain unchanged, and provide an explanation for your answer in each case. (13 pts) Atlas domestic Atlas net capital Atlas real exchange Atlas net exports investment (3pts) outflow (3pts)...
Suppose that wealth levels decrease and firms' profitable business opportunities increase in the economy. Then in...
Suppose that wealth levels decrease and firms' profitable business opportunities increase in the economy. Then in this market, the equilibrium price for bonds will fall will rise could go up or down, it's impossible to tell none of the above
40. In the basic model of a small open economy, if consumers shift their preferences toward...
40. In the basic model of a small open economy, if consumers shift their preferences toward foreign cars, then net exports: A) fall and the real exchange rate falls. B) fall but the real exchange rate remains unchanged. C) remain unchanged but the real exchange rate falls. D) and the real exchange rate remain unchanged.
If firms in the economy find that there are less profitable business opportunities, then in the...
If firms in the economy find that there are less profitable business opportunities, then in the bond market, the equilibrium interest rate will ____ and the equilibrium price will ____ . rise; fall rise; rise fall; rise fall; fall
31. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic gover...
31. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase: A) investment in the small open economy. B) saving in the small open economy. C) exports by the small open economy. D) imports by the small open economy.
5. A small open economy is initially in trade balance. There is a temporary increase in...
5. A small open economy is initially in trade balance. There is a temporary increase in householo income fo r one period (i.e. rise in y.). What effect does this have on the current acc period t and the following periods? Does this story change if the increase in income is permanent?
Use the long run model for a small open economy to determine the expected effect on...
Use the long run model for a small open economy to determine the expected effect on the equilibrium from a decrease in taxes (T). For each of the following variables, state whether it is expected to increase (+), decrease (–), remain unchanged (0), or whether the effect is indeterminate (?). Explain your answers. All variables are in real terms. (a) national savings (S) (b) net exports (NX ) (c) the real exchange rate (ε)
1. Consider a small open economy where an increase in business confidence leads to an increase in investment expenditure. Examine the loanable funds market and show what happens to Investment, National Saving, real interest rates, capital flows and the current account (net exports). Examine the market for foreign exchange and show what happens to the real exchange rate. Now consider that the country is not so small, what else might change, how might your answer differ?
1. Consider a small open economy where an increase in business confidence leads to an increase in investment expenditure. Examine the loanable funds market and show what happens to Investment, National Saving, real interest rates, capital flows and the current account (net exports). Examine the market for foreign exchange and show what happens to the real exchange rate. Now consider that the country is not so small, what else might change, how might your answer differ?
3. Recall the small open economy model we considered, and answer the following questions for a small open economy named Atlas. For each of the slots labeled (a) through (d), indicate whether the policy listed to the leftmost column causes the variable listed in the upper row to rise, fall, or remain unchanged, and provide an explanation for your answer in each case. (13 pts) Atlas domestic Atlas net capital Atlas real exchange Atlas net exports investment (3pts) outflow (3pts)...
40. In the basic model of a small open economy, if consumers shift their preferences toward foreign cars, then net exports: A) fall and the real exchange rate falls. B) fall but the real exchange rate remains unchanged. C) remain unchanged but the real exchange rate falls. D) and the real exchange rate remain unchanged.
31. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase: A) investment in the small open economy. B) saving in the small open economy. C) exports by the small open economy. D) imports by the small open economy.
5. A small open economy is initially in trade balance. There is a temporary increase in householo income fo r one period (i.e. rise in y.). What effect does this have on the current acc period t and the following periods? Does this story change if the increase in income is permanent?
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