Homework Answers
In a small open economy, if the world interest rate falls , then domestic investment will increase because interest rate and investment are inversely related and the real exchange rate will increase, holding all else constant. Hence, option(D) is correct.
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39. In a small open economy, if the world interest rate falls, then domestic investment will _and the real exchange...
22. In a small open economy, if the world interest rate increases, then the supply of domestic currency on the forei...
22. In a small open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will and the real exchange rate will holding all else constant. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
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
Exhibit: IS*–LM* and AD A small open economy with a floating exchange rate is initially in...
Exhibit: IS*–LM* and AD A small open economy with a floating exchange rate is initially in equilibrium at A with IS1*, LM1*. Holding all else constant, if the domestic price level increases, then the _____ curve will shift to _____. A. IS1*; IS2* B. IS1*; IS3* C. LM1*; LM2* D. LM1*; LM3*
4. Show and describe what happens in a LARGE OPEN ECONOMY to consumption (C), real interest rates (r), domestic inv...
4. Show and describe what happens in a LARGE OPEN ECONOMY to consumption (C), real interest rates (r), domestic investment (I), domestic savings (S), net exports (NX), capital flow (CF), and the real exchange rate (E) when there is a decrease in government spending in the large open economy. Show all steps.
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)....
1: what would happen to national saving, investment, trade balance interest rate, and real exchange rate...
1: what would happen to national saving, investment, trade balance interest rate, and real exchange rate in responding to an increase in tariff on imported cars by the domestic government? graphically explain with the help of large open economy 2: what do you mean by trade policies? it's argued that protectionist trade policy benefits only local producers whereas society on the average suffers from it, do you agree with the statement? graphically explain considering a model of small open economy?
Holding constant the expected rate of return on all possible investment opportunities in the economy, a(n)
Holding constant the expected rate of return on all possible investment opportunities in the economy, a(n) A decrease in the real rate of interest will tend to decrease the level of investment. B increase in the real rate of interest will tend to increase the level of investment. C change in the real interest rate will have no impact on the level of investment. D decrease in the real rate of interest will tend to increase the level of investment
14. Consider the open-economy loanable funds model with flexible prices and capital mobility. Suppose that the...
14. Consider the open-economy loanable funds model with flexible prices and capital mobility. Suppose that the world consists of a small open economy (we call this domestic) and the rest of the world (we call this foreign). Answer the following questions with the aid of figures where appropriate a. How does an increase in domestic government expenditure affect trade balance and real exchange rate? (2 points] b. How does an increase in foreign government expenditure affect the trade balance and...
QUICK CHECK multiple choice 1. Holding other things constant, an increase in the world interest rate...
QUICK CHECK multiple choice 1. Holding other things constant, an increase in the world interest rate increases which of the following? a. national saving and domestic investment b. national saving and the net capital outflow c. domestic investment and the net capital outflow d. national saving only 2. An appreciation of a nation's currency can be the result of which of the following? a. an increase in net exports b. a decrease in net exports c. a fall in national...
When the price level falls, it causes the real exchange rate to depreciate. This is called...
When the price level falls, it causes the real
exchange rate to depreciate. This is called the
When the price level falls, it causes the real exchange rate to depreciate. This is called the Select one: a. Wealth effect o b. Interest-rate effect o c Open economy effect d. None of the above
22. In a small open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will and the real exchange rate will holding all else constant. A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
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
4. Show and describe what happens in a LARGE OPEN ECONOMY to consumption (C), real interest rates (r), domestic investment (I), domestic savings (S), net exports (NX), capital flow (CF), and the real exchange rate (E) when there is a decrease in government spending in the large open economy. Show all steps.
14. Consider the open-economy loanable funds model with flexible prices and capital mobility. Suppose that the world consists of a small open economy (we call this domestic) and the rest of the world (we call this foreign). Answer the following questions with the aid of figures where appropriate a. How does an increase in domestic government expenditure affect trade balance and real exchange rate? (2 points] b. How does an increase in foreign government expenditure affect the trade balance and...
QUICK CHECK multiple choice 1. Holding other things constant, an increase in the world interest rate increases which of the following? a. national saving and domestic investment b. national saving and the net capital outflow c. domestic investment and the net capital outflow d. national saving only 2. An appreciation of a nation's currency can be the result of which of the following? a. an increase in net exports b. a decrease in net exports c. a fall in national...
When the price level falls, it causes the real
exchange rate to depreciate. This is called the
When the price level falls, it causes the real exchange rate to depreciate. This is called the Select one: a. Wealth effect o b. Interest-rate effect o c Open economy effect d. None of the above
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