32 Understanding how a nation's economy works requires a complete understanding of the: A)political system. B)level...
32 Understanding how a nation's economy works requires a complete understanding of the: A)political system. B)level of imports and exports. C)exchange rate with other currencies. D)tax system.
Homework Answers
Answer is D. Tax system
Political system does not interfere much with economy that's why complete information is not needed.
A country could follow autarky and may not allow trade with other countries so export import and exchange rate does not matter in that case.
Tax system allow the nation to take actions about distribution of income and government makes expenditure according to tax collected. So from given tax system is most important to understand.
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32 Understanding how a nation's economy works requires a
complete understanding of the: A)political system. B)level...
1.With time, an appreciation in the value of the nation's currency in the foreign exchange market...
1.With time, an appreciation in the value of the nation's currency in the foreign exchange market would cause A.the nation's imports to increase and exports to decline. B.the nation's exports to increase and imports to decline. C.both imports and exports to decline. D.both imports and exports to rise. 2. The short-run aggregate supply curve: A. has the same slope as the long-run aggregate supply curve (LRAS curve) B. shifts only when the long-run aggregate supply curve (LRAS curve) shifts in...
2. An appreciation of a nation's currency can be the result of which of the folowing?...
2. An appreciation of a nation's currency can be the result of which of the folowing? a. an increase in net exports b. a decrease in net exports c. a fal in national saving d. a decrease in domestic demand for investment 3. The government n an open economy increases spending. As a resut, the supply of loanable funds from national saving_ leading to an). . net capital outflow and a real exchange rate / a. fals, reduced, appreciation b....
How would aggregate demand change if foreign incomes increase and the exchange rate value of the...
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Describe the channels by which monetary policy ripples through the economy and explain how each channel...
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Consider the following diagram showing the AD curves in two different economies. One economy is Autarkland—it...
Consider the following diagram showing the AD
curves in two different economies. One economy is Autarkland—it
does not trade with the rest of the world (autarky is a
situation in which a country does not trade with other countries).
The other economy is Openland—it exports to and imports from the
rest of the world.
Explain why an increase in the domestic price level
(for a given exchange rate) reduces net exports in Openland. How
would you illustrate this with the...
(b) 9 marks Now assume that the economy is not closed so there are imports and...
(b) 9 marks Now assume that the economy is not closed so there are imports and exports. As- sume also that there is a government in your model. Consumption is given by C = 100+ 0.8(1 – t)Y where the tax rate t = 0.25 and imports are zY where z is 0.2 and Y is income. • What is the relationship between income, consumption, investment, government expenditure, exports and imports in equilibrium? • What is the multiplier? • The...
1. Consider an economy where aggregate expenditures can be characterized by the following information: household consumption...
1. Consider an economy where aggregate expenditures can be characterized by the following information: household consumption C = 100+ 0.8Yd, investment expenditure 1 = 100, government expenditure G = 300, exports X = 300 and imports IM = 0.14Y. Suppose that the income tax rate is 20%, and that the government has no initial debt, so that D = 0. (a) Solve for the AE function and the equilibrium level of national output Y. (b) Solve for the government's budget...
If the economy is currently experiencing SRAS and AD intersecting at a level of GDP that...
If the economy is currently experiencing SRAS and AD intersecting at a level of GDP that is below the full employment level, which of the following would move the economy back toward the natural rate of unemployment? (Hint: draw a graph with the SRAS, LRAS, and AD curves on it that fits this description in the question.) an increase in wealth an increase in the value of the dollar relative to other currencies an increase in interest rates a decrease...
Macroland is a small open economy with perfect capital mobility and a fixed-exchange-rate system. Macroland is...
Macroland is a small open economy with perfect capital mobility and a fixed-exchange-rate system. Macroland is initially in the long-run equilibrium at the natural level of output with balanced trade. With the help of an appropriate diagram, compare the impact of a tax cut in the short run (when prices are fixed) and in the long run (when prices are flexible) on: 1. Output, 2. Consumption, 3. Investment, 4. Net exports 5. Exchange rate.
1) The price of one currency in terms of another is called A)...
1) The price of one currency in terms of another is called A) the exchange rate. B) purchasing power parity. C) the terms of trade. D) a currency band. 2) The three policies which cannot be maintained simultaneously by a nation (sometimes referred to as the "trilemma") do NOT include A) independent control of the money supply. B) independent control of fiscal policy. C) free flow of capital. D) fixed exchange rates 3) The foreign exchange rate refers to A) the rate of change in...
2. An appreciation of a nation's currency can be the result of which of the folowing? a. an increase in net exports b. a decrease in net exports c. a fal in national saving d. a decrease in domestic demand for investment 3. The government n an open economy increases spending. As a resut, the supply of loanable funds from national saving_ leading to an). . net capital outflow and a real exchange rate / a. fals, reduced, appreciation b....
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
Consider the following diagram showing the AD
curves in two different economies. One economy is Autarkland—it
does not trade with the rest of the world (autarky is a
situation in which a country does not trade with other countries).
The other economy is Openland—it exports to and imports from the
rest of the world.
Explain why an increase in the domestic price level
(for a given exchange rate) reduces net exports in Openland. How
would you illustrate this with the...
(b) 9 marks Now assume that the economy is not closed so there are imports and exports. As- sume also that there is a government in your model. Consumption is given by C = 100+ 0.8(1 – t)Y where the tax rate t = 0.25 and imports are zY where z is 0.2 and Y is income. • What is the relationship between income, consumption, investment, government expenditure, exports and imports in equilibrium? • What is the multiplier? • The...
1. Consider an economy where aggregate expenditures can be characterized by the following information: household consumption C = 100+ 0.8Yd, investment expenditure 1 = 100, government expenditure G = 300, exports X = 300 and imports IM = 0.14Y. Suppose that the income tax rate is 20%, and that the government has no initial debt, so that D = 0. (a) Solve for the AE function and the equilibrium level of national output Y. (b) Solve for the government's budget...
If the economy is currently experiencing SRAS and AD intersecting at a level of GDP that is below the full employment level, which of the following would move the economy back toward the natural rate of unemployment? (Hint: draw a graph with the SRAS, LRAS, and AD curves on it that fits this description in the question.) an increase in wealth an increase in the value of the dollar relative to other currencies an increase in interest rates a decrease...
1) The price of one currency in terms of another is called A) the exchange rate. B) purchasing power parity. C) the terms of trade. D) a currency band. 2) The three policies which cannot be maintained simultaneously by a nation (sometimes referred to as the "trilemma") do NOT include A) independent control of the money supply. B) independent control of fiscal policy. C) free flow of capital. D) fixed exchange rates 3) The foreign exchange rate refers to A) the rate of change in...
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