Using the macroeconomic model studied, analyze the impact of the following events on Canadian sav...
Using the macroeconomic model studied, analyze the impact of the
following events on Canadian savings, investment, exchange rate and
trade balance in the Canadian economy:
a: voluntary export restraint (VER) by Japanese car producers.
Explain with words + graph(s).
Homework Answers
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Using the macroeconomic model studied, analyze the impact of the following events on Canadian sav...
Using the macroeconomic model studied, analyze the impact of the following events on Canadian savings, investment,...
Using the macroeconomic model studied, analyze the impact of the following events on Canadian savings, investment, exchange rate and trade balance in the Canadian economy: a: voluntary export restraint (VER) by Japanese car producers. Explain with words + graph(s).
Use the model of the small open economy (Apply the small open economy model of real...
Use the model of the small open economy (Apply the small open economy model of real exchange rate determination ) to predict what would happen to the trade balance, the real exchange rate, and the nominal exchange rate in response to each of the following events. draw a graph (be sure to label all points, shifts and curves) and provide a short verbal analysis of the impact on the trade balance, the real exchange rate and the nominal exchange rate)....
6 24 2 8. Then use the following information to show the impact of a change...
6 24 2 8. Then use the following information to show the impact of a change in exchange rate on the trade balance Suppose that there are two goods sold in China and in the U.S When the exchange rate is 1USD = 6 yuan a car cost $50,000 in US and 0,000 yuan in China and the price of a shirt is $20 in U.S and 120 yuan in China. US imports the shirt and exports the cars 30...
1. A. Suppose in an economy, there is an exogenous fall in investment spending due to the burst of a housing bubble. Answer the following questions using the IS-LM-FX model. Which schedule shifts...
1. A. Suppose in an economy, there is an exogenous fall in investment spending due to the burst of a housing bubble. Answer the following questions using the IS-LM-FX model. Which schedule shifts in the IS-LM model on impact? ii. i. What happens to the equilibrium output, interest rate, and exchange rate after this change? B. Suppose that following the decline in investment spending, the central bank decides to pursue an output stabilization policy. Answer the following questions comparing the...
Use the following macroeconomic model to answer questions from Q1 through Q11: C 115 + 0.75Yd,...
Use the following macroeconomic model to answer questions from Q1 through Q11: C 115 + 0.75Yd, where C = Consumption function; Yd (Y-T-Disposable income I 150; Investment G-200; G Government expenditure T-100; T = Tax revenue 40; X = Export M = 30; M-Import Also assume that Yf Full employment GDP (potential GDP) 2,000 a1. Estimate the equilibrium GDP level (income, Ye). Q2. Estimate the level of aggregate consumption (C) Q3. Estimate the level of aggregate saving (S) Q4. The...
Intermediate Macro Question Consider a small open economy in the classical model, assume the production function...
Intermediate Macro Question Consider a small open economy in the classical model, assume the production function is y=1000(square root KL) K=20 L=5 Government spending is 1000 and taxes are 1000. the consumption function is c=1500+0.5(Y-T) investment equation is 1000-50r=I net export function is 5000-5000e world interest rate is r=r*=10 Solve 1 income 2 consumption 3 National Savings 4. Investments 5. Trade balance 6 Real exchange rate 7. The real world interest rate rises to 20 solve for the new values...
Question 1 (20 marks) The recent global outbreak of Covid-19 has major economic consequences. Using the...
Question 1 (20 marks) The recent global outbreak of Covid-19 has major economic consequences. Using the AS-AD model, show what will be short-term impact of this crisis on the AIRLINE INDUSTRY Discuss some reasons why this impact may happen. b. Bank of Canada has already taken Fiscal and Monetary policy measures to stabilize the economy during the time of this outbreak. What actions has it take in terms of Fiscal Policy? In terms of Monetary Policy? (Provide specific details, Use...
Consider the two-sector edogenous growth model Y = F[K, (1− u)LE] = K0.3[(1 − u)LE]0.7 Output...
Consider the two-sector edogenous growth model Y = F[K, (1− u)LE] = K0.3[(1 − u)LE]0.7 Output per effective worker is y = f(k, 1 − u) = k0.3(1 − u)0.7 (3 points) In this economy, with a depreciation rate of 13%, a population growth rate of 2%, and technological growth rate of g(u), what is the break-even investment (the amount of investment needed to keep capital per effective worker constant)? (7 points) Write down the equation of motion for k...
2) Consider the following model of an economy. Note we introduce the external sector as a...
2) Consider the following model of an economy. Note we introduce the external sector as a source of savings. Y = F(R,N) C = C(Y-TA I = I(r) NX = NX(Y-TA) Y = C +I+G+NX Wherer is the real rate of interest, and investment is a declining function of the real interest rate such that when real interest rates rise, investment falls. Note also that consumption is a positive function of disposable income such that as disposable income rises, so...
1. (45 points) Consider the closed-economy one-period macroeconomic model developed in class. The...
1. (45 points) Consider the closed-economy one-period macroeconomic model developed in class. The consumer is endowed with h units of time, and chooses consumption C and leisure ` to maximize U = log(C) + θlog(`), subject to the budget constraint C = wNs + π. Production is described by Y = zNd . Government spending G is financed with a proportional revenue tax (tax rate τ ) on the firm. (a) (10) Find the firm’s optimal demand for labor Nd...
6 24 2 8. Then use the following information to show the impact of a change in exchange rate on the trade balance Suppose that there are two goods sold in China and in the U.S When the exchange rate is 1USD = 6 yuan a car cost $50,000 in US and 0,000 yuan in China and the price of a shirt is $20 in U.S and 120 yuan in China. US imports the shirt and exports the cars 30...
1. A. Suppose in an economy, there is an exogenous fall in investment spending due to the burst of a housing bubble. Answer the following questions using the IS-LM-FX model. Which schedule shifts in the IS-LM model on impact? ii. i. What happens to the equilibrium output, interest rate, and exchange rate after this change? B. Suppose that following the decline in investment spending, the central bank decides to pursue an output stabilization policy. Answer the following questions comparing the...
Use the following macroeconomic model to answer questions from Q1 through Q11: C 115 + 0.75Yd, where C = Consumption function; Yd (Y-T-Disposable income I 150; Investment G-200; G Government expenditure T-100; T = Tax revenue 40; X = Export M = 30; M-Import Also assume that Yf Full employment GDP (potential GDP) 2,000 a1. Estimate the equilibrium GDP level (income, Ye). Q2. Estimate the level of aggregate consumption (C) Q3. Estimate the level of aggregate saving (S) Q4. The...
Question 1 (20 marks) The recent global outbreak of Covid-19 has major economic consequences. Using the AS-AD model, show what will be short-term impact of this crisis on the AIRLINE INDUSTRY Discuss some reasons why this impact may happen. b. Bank of Canada has already taken Fiscal and Monetary policy measures to stabilize the economy during the time of this outbreak. What actions has it take in terms of Fiscal Policy? In terms of Monetary Policy? (Provide specific details, Use...
2) Consider the following model of an economy. Note we introduce the external sector as a source of savings. Y = F(R,N) C = C(Y-TA I = I(r) NX = NX(Y-TA) Y = C +I+G+NX Wherer is the real rate of interest, and investment is a declining function of the real interest rate such that when real interest rates rise, investment falls. Note also that consumption is a positive function of disposable income such that as disposable income rises, so...
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