Homework Answers
Ans: B ) make loans to foreigners.
Explanation:
In a small open economy, if domestic savings exceeds domestic investment then the extra savings will be used to make loans to foreigners in order to earn more return on savings.
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37. In a small open economy, if domestic saving exceeds domestic investment, then the extra saving...
In an open economy, the government deficit is 600 and saving exceeds investment by 500, so...
In an open economy, the government deficit is 600 and saving exceeds investment by 500, so in equilibrium the trade deficit (IM − X) must be a. 100. b. 700. c. 200. d. 300.
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.
8. In a small open economy, if the world real interest rate is above the rate...
8. In a small open economy, if the world real interest rate is above the rate at which national saving exceeds domestic investment, then there will be a trade _and net capital outflow. A) surplus; negative B) deficit; positive C) surplus, positive D) deficit; negative
2. Show that in an open economy private saving has to be allocated between investment, government...
2. Show that in an open economy private saving has to be allocated between investment, government debt and purchases of wealth from foreigners. That is, show that S = I + CA + (G T
In a large open economy, what is the source of the domestic supply of loanable funds?...
In a large open economy, what is the source of the domestic supply of loanable funds? A. Net capital outflow B. National saving and investment C. National saving D. Investment
Consider two large open economies, the home economy and the foreign economy. In both countries th...
Can someone please explain?
Consider two large open economies, the home economy and the foreign economy. In both countries the following relationships hold Domestic Foreign Desired consumption, Cd-320 + 0.4(Y-T)-200rw. Desired investment, 150 200* Output, Y = 1.000 Taxes, T 200 Government purchases. G 275 Fr4800.4(YFr To 300r. For 225 300 For1,500 For-300 For 300 a. What is the equilibrium interest rate in the international capital market?(Enter your response as a decimal rounded to three places.) What are the equilibrium...
39. In a small open economy, if the world interest rate falls, then domestic investment will _and the real exchange...
39. In a small open economy, if the world interest rate falls, then domestic investment will _and the real exchange rate will holding all else constant. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
2. Consider a large open domestic economy with a financial account surplus. i. Draw a diagram sho...
2. Consider a large open domestic economy with a financial account surplus. i. Draw a diagram showing this situation (Your answer should include two graphs, one for the omestic economy and one for the foreign economy). (10 Points)- Note: Draw the two graphs side by side and clearly indicate the world interest rate as a single line going through both graphs. ii. What are the effects, in equilibrium, on the world real interest rate, domestic national saving, domestic investment, the...
In a closed economy, private saving is smaller than investment if government spending exceeds tax revenue....
In a closed economy, private saving is smaller than investment if government spending exceeds tax revenue. Select one: True False If there is a surplus of loanable funds, then neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. Select one: True False An increase in the budget deficit would cause a shortage of loanable funds at the original interest rate, which would lead to falling interest...
If a small open economy cuts defense spending, what happens to saving, investment, the trade balance,...
If a small open economy cuts defense spending, what happens to saving, investment, the trade balance, the interest rate, and the exchange rate?
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.
8. In a small open economy, if the world real interest rate is above the rate at which national saving exceeds domestic investment, then there will be a trade _and net capital outflow. A) surplus; negative B) deficit; positive C) surplus, positive D) deficit; negative
Can someone please explain?
Consider two large open economies, the home economy and the foreign economy. In both countries the following relationships hold Domestic Foreign Desired consumption, Cd-320 + 0.4(Y-T)-200rw. Desired investment, 150 200* Output, Y = 1.000 Taxes, T 200 Government purchases. G 275 Fr4800.4(YFr To 300r. For 225 300 For1,500 For-300 For 300 a. What is the equilibrium interest rate in the international capital market?(Enter your response as a decimal rounded to three places.) What are the equilibrium...
39. In a small open economy, if the world interest rate falls, then domestic investment will _and the real exchange rate will holding all else constant. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
2. Consider a large open domestic economy with a financial account surplus. i. Draw a diagram showing this situation (Your answer should include two graphs, one for the omestic economy and one for the foreign economy). (10 Points)- Note: Draw the two graphs side by side and clearly indicate the world interest rate as a single line going through both graphs. ii. What are the effects, in equilibrium, on the world real interest rate, domestic national saving, domestic investment, the...
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