PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 11, Problem 5P
(a)
To determine
Determine whether the given statement indicates a trade surplus or
(b)
To determine
Determine whether the given statement indicates the trade surplus or trade deficit and capital outflow or capital inflow.
(c)
To determine
Determine whether the given statement indicates the trade surplus or trade deficit and capital outflow or capital inflow.
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For the past year, a country has 200 million of exports of goods and services, 160 million of imports of goods and services, 60 million of income received
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Chapter 11 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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Similar questions
- Suppose that during a recent year for the United States, merchandise imports were $2 trillion, unilateral transfers were a net outflow of $0.2 trillion, service exports were $0.2 trillion, service imports were $0.1 trillion, and merchandise exports were $1.4 trillion. a. What was the merchandise trade deficit? b. What was the balance on goods and services? c. What was the current account balance?arrow_forwardImagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1% of Germany’s GDP; private savings is 20% of GDP; and physical investment is 18% of GDP. a. Based on the national saving and investment identity, what is the current account balance? b. If the government budget surplus falls to zero, how will this affect the current account balance?arrow_forwardQ3-5 With perfect capital mobility and other things equal, an exogenous increase in demand for a country's exports will lead to ______ increase in the country's national income under fixed exchange rates than under flexible exchange rates. Select one: a. a greater b. a smaller c. the same d. a greater, a smaller, or the same; it is impossible to determine without more informationarrow_forward
- A decrease in Chinese demand for U.S. dollars over the past year has reduced the market equilibrium exchange rate of the dollar from 10 yuan per dollar to 6.5 yuan per dollar. Other things being equal, which of the following is a likely consequence of this kind of change in the exchange rate of the dollar? a. A higher price of exported U.S. products in Chinese for those paying in yuan, which leads to a deficit in the net export. b. A lower price for imported Chinese products in the U.S. for those paying in dollars, which leads to a surplus in the net export. c. A higher price for imported Chinese products in the U.S. for those paying in dollars, which leads to a deficit in the net export. d. Both (a) and (c)arrow_forwardState whether each of the following events involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy: a. Mexico imports services from Japan b. Mexico exports goods to Canada c. U.S. investors receive a return from past financial investments in Mexicoarrow_forwardQ.1.2 A deficit on the current account of a country's balance of payments can be financed by a surplus: (1) Of exports over imports; (2) Of net gold exports; (3) On the financial account; (4) On the trade balance.arrow_forward
- A government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why such a statement is self- contradictory.arrow_forwardWould each of the following transactions be includedin U.S. net exports or in U.S. net capital outflow?Indicate whether it would represent an increase or adecrease in that variable.a. An American buys a Sony TV.b. An American buys a share of Sony stock.c. The Sony pension fund buys a bond from theU.S. Treasury.d. A worker at a Sony plant in Japan buys someGeorgia peaches from an American farmer.arrow_forwardExchange Rate Effects on Trade Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar could affect the U.S. balance-of-trade deficit.arrow_forward
- People sometimes worry that American trade with other countries will lead to large U.S. trade deficits and the movement of massive amounts of American capital out of the country. This worry is unfounded because countries cannot a) have both current account and financial account deficits at the same time. b) increase savings at the same time that a trade deficit grows. c) spend more than they earn. d) invest more than they save.arrow_forward12. Let K denote the quantity of capital a country has at the beginning of period t. Also, suppose that capital depreciates at a constant rate d, so that dK; of the capital stock wears out during period t. If investment during period t isdenoted by It, and the country does not trade with the rest of the world (the current account surplus is always zero), then we can say that the quantity of capital at the beginning of period t + 1 is given by K+1 = (1– d)K; +It Suppose at the beginning of year 0 that this country has 80 units of capital. Investment expenditures are 10 units in each of years 0, 1, 2, 3, 4, ..., 10. The capital stock depreciates by 10% per year. (a) Calculate the quantity of capital at the beginning of years 0, 1, 2, 3, 4, . .., 10.arrow_forwardWhat do the plus signs and negative signs signify in the U.S. balance-of-payments statement? Which of the following items appear in the current account and which appear in the capital and financial account? U.S. purchases of assets abroad; U.S. services imports; foreign purchases of assets in the United States; U.S. goods exports; U.S. net investment income. Why must the current account and the capital and financial account sum to zero?arrow_forward
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