Question 55)
d) It would not change because the world interest rate is not affected.
When import quota is sancioned , there is increase in exports of home country and this appreciates the exchange rate in home currency terms. This appreciation no way affects the interest rate and hence it stays the same.
Question 56) b) Canadian exports increase and dollar appreciates
With import quota there will be more Canadian exports and this will increase demand for Canadian dollar which will appreciate its value.
Question 57) a) Trade Policy do not affect trade balance but affect industries in differently than others
Trade policy like quotas will increase exports which will appreciate exchange rates and which in sum brings the net effect back and there is no change in trade balance. Different industries may be affected differently as trade policy has disproportionate affect on the industries, it may affect the industry on which quota is applied more than any other industry.
Figure 13-2 Real Interest Rate Supply of Loarable Funds World interest rate, o Derrand for Loanable...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of the following curves would this quota shift? a. supply of loanable funds left b. demand for loanable funds left c. demand for Canadian dollars right d. supply of Canadian dollars left 8. Suppose the Canadian government imposed import quotas on agricultural products. According to the foreign-currency exchange market diagram, which of the following outcomes would most likely result? a. Both the demand and supply curves...
The supply of loanable funds (the source of funds) consists of Question 1 options: a) Total domestic saving and net foreign saving. b) Investment and net exports. c) Total domestic saving and investment. d) Only total domestic saving. Question 2 (1 point) Saved Assuming all else held constant, an increase in net exports will lead to Question 2 options: a) an increase in net foreign saving. b) a decrease in the source of funds. c) a decrease in the trade...
Does a change in the real interest rate shift the supply of loanable funds curve? Explain your answer. How does a currency drain affect the money multiplier? What are the two channels through which the world economy can affect U.S. aggregate demand? State what changes in the world economy can increase U.S. aggregate demand.
What influences the supply of loanable funds? The supply of loanable funds is influenced by O A. the real interest rate, and as the real interest rate rises, the supply of loanable funds increases O B. expected future income, and the higher a household's expected future income, the smaller is its saving today O c. expected profit OD. a household's wealth, and the greater a household's wealth, the greater is its saving
Which factor brings the supply and demand of loanable funds into balance? the real interest rate O net capital outflows the futures market for commodities domestic investment O collective bargaining
Real interest rate (percent per year) 9.07 SLF The graph shows the supply of loanable funds and the demand for loanable funds in an economy Suppose the government has a budget deficit of $0.2 trillion and the Ricardo-Barro effect holds. Draw the new demand for loanable funds curve. Label it. Draw the new supply of loanable funds curve. Label it. Draw a point that shows the equilibrium quantity of loanable funds and interest rate. The Ricardo-Barro effect is the proposition...
Show how a decrease in the supply of loanable funds and an increase in the demand for loanable funds can raise the real interest rate and leave the equilibrium quantity of loanable funds unchanged. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Now draw a curve that shows an increase in...
S3 S1 S2 real interest rate D1 D2 Loanable funds Refer to the figure above. If the economy starts at point o, how would you illustrate the effect of a positive technological shock that increases returns to investment in high-tech industries, by moving to point: im
Interest rate $100 Quantity of loanable funds (billions of dollars) In the Loanable Funds diagram (shown), a decrease in savings by the private sector will shift the curve to the , causing the equilibrium interest rate to
As the real interest rate rises, the quantity of loanable funds: supplied also rises supplied is unchanged demanded also rises demanded is unchanged The supply curve in the loanable funds model is: upward sloping vertical. downward sloping horizontal.