Homework Answers
Assume that some large foreign countries begin to subsidize investment by instituting an investment tax credit. Then , if world saving does not depend on the interest rate , world investment will remain unchanged and small country investment will fall. Hence, option(C) is correct.
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7. Assume that some large foreign countries begin to subsidize investment by instituting an investment tax credit. T...
26. Assume that some large foreign countries decide to subsidize investment by instituting an investment tax credit....
26. Assume that some large foreign countries decide to subsidize investment by instituting an investment tax credit. Then a small country's real exchange rate: A) will fall and its net exports will rise. B) will rise and its net exports will fall. C) and net exports will both fall. D) and exports will both rise.
5. Gotham is a small open economy. Suppose that a large number of foreign countries begin...
5. Gotham is a small open economy. Suppose that a large number of foreign countries begin to subsidize investment by instituting an investment tax credit (while adjusting other taxes to hold their tax revenue constant), but Gotham does not institute such an investment subsidy. a) What happens to world investment demand as a function of the world interest rate? b) What happens to the world interest rate? c) What happens to investment in Gotham? d) What happens to Gotham's trade...
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...
Multiple choice Select all that apply 2. Foreign investment Aa Aa A loan made at the...
Multiple choice
Select all that apply
2. Foreign investment Aa Aa A loan made at the market rate of interest from an American banking syndicate to an entrepreneur in a developing country is an example of which of the following types of foreign investment? O O Foreign direct investment Portfolio investment Trade credit Commercial bank loan Which of the following statements are true of foreign investment in developing countries? Check all that apply. O It tends to be concentrated in...
7. Consider Two large open economics, the home economy and the foreign economy. In the home count...
7. Consider Two large open economics, the home economy and the foreign economy. In the home country the following relationships hold: desired consumption, Cd = 420+0.4(Y-T)-200rw desired investment, Id =250-200rw output, Y =1000 TAXES, t = 200 Government purchases, G =275 In the foreign country the following relationships hold: Desired consumption, Cdfor = 480+0.4(Yfor-Tfor)-300rw Desired investment, Idfor=225-300rw Output, Yfor = 1500 Taxes, T for =300 Government purchase, G for =300 What is the equilibrium interest rate in the international capital...
Businesses in some parts of Canada are eligible for The Atlantic Investment Tax Credit, a 10%...
Businesses in some parts of Canada are eligible for The Atlantic Investment Tax Credit, a 10% tax credit. The Canadian government has decided to decrease this credit from 10% to 5%. The graph below is the hypothetical loanable funds market in Canada prior to the cut. a. Use the interactive graph to illustrate the impact this decrease in the tax credit will have, holding all else constant. Supply 10 8 7 4 2 Demand 0 5 10 15 20 25...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of...
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...
6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and...
6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and the central bank's policy reaction function. (b) The consumption function and the Taylor rule. (c) The equation for PAE, the central bank's policy reaction and Y = PAE. (d) Y=PAE and the consumption function. (e) The equation for planned investment and the central bank policy reaction function. 7.The AD curve is generally assumed to have a negative slope. However, which of the following would...
Tuesday Feb 18 Que Name Problem Set 7 Econ 2301 1. If the exchange rate between...
Tuesday Feb 18 Que Name Problem Set 7 Econ 2301 1. If the exchange rate between the U.S. and Mexico (let's look at price of one dollar in Mexican pesos) changes from 12 pesos - $1 to 18 pesos = $1 (as happened between about 2013 and spring 2016, a. the dollar has appreciated in value b. the peso has deprecated in value c. the dollar has depreciated in value d. the peso has appreciated in value e. a and...
1. Given the information in Table 1, in a two country and two-product Ricardian model, which...
1. Given the information in Table 1, in a two country and two-product Ricardian model, which of the following statements is (are) true? Table 1 Unit Labour Requirements T-shirt Brandy 4 hours 12 hours 6 hours 12 hours United States France A) The pretrade price ratio in France is 1 brandy - 2 T-shirts. B) The US pretrade price ratio is 1 brandy - 4 T-shirts. C) The US pretrade price ratio is 1 T-shirt = 1/3 brandy. D) The...
26. Assume that some large foreign countries decide to subsidize investment by instituting an investment tax credit. Then a small country's real exchange rate: A) will fall and its net exports will rise. B) will rise and its net exports will fall. C) and net exports will both fall. D) and exports will both rise.
5. Gotham is a small open economy. Suppose that a large number of foreign countries begin to subsidize investment by instituting an investment tax credit (while adjusting other taxes to hold their tax revenue constant), but Gotham does not institute such an investment subsidy. a) What happens to world investment demand as a function of the world interest rate? b) What happens to the world interest rate? c) What happens to investment in Gotham? d) What happens to Gotham's trade...
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...
Multiple choice
Select all that apply
2. Foreign investment Aa Aa A loan made at the market rate of interest from an American banking syndicate to an entrepreneur in a developing country is an example of which of the following types of foreign investment? O O Foreign direct investment Portfolio investment Trade credit Commercial bank loan Which of the following statements are true of foreign investment in developing countries? Check all that apply. O It tends to be concentrated in...
Businesses in some parts of Canada are eligible for The Atlantic Investment Tax Credit, a 10% tax credit. The Canadian government has decided to decrease this credit from 10% to 5%. The graph below is the hypothetical loanable funds market in Canada prior to the cut. a. Use the interactive graph to illustrate the impact this decrease in the tax credit will have, holding all else constant. Supply 10 8 7 4 2 Demand 0 5 10 15 20 25...
Tuesday Feb 18 Que Name Problem Set 7 Econ 2301 1. If the exchange rate between the U.S. and Mexico (let's look at price of one dollar in Mexican pesos) changes from 12 pesos - $1 to 18 pesos = $1 (as happened between about 2013 and spring 2016, a. the dollar has appreciated in value b. the peso has deprecated in value c. the dollar has depreciated in value d. the peso has appreciated in value e. a and...
1. Given the information in Table 1, in a two country and two-product Ricardian model, which of the following statements is (are) true? Table 1 Unit Labour Requirements T-shirt Brandy 4 hours 12 hours 6 hours 12 hours United States France A) The pretrade price ratio in France is 1 brandy - 2 T-shirts. B) The US pretrade price ratio is 1 brandy - 4 T-shirts. C) The US pretrade price ratio is 1 T-shirt = 1/3 brandy. D) The...
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