Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 18.1, Problem 1QQ
To determine
Define net export and net capital outflow.
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Studies indicate that net exports and net capital outflows tend to be equal.
1. Explain why net exports and net capital outflows always tend to be equal.
2. Explain how a change in interest rates can lead to changes in net exports?
I am a bit confused on how to identify whether the problems are decreasing/increasing in Net Exports and Net Capital Flow
a) Would each of the following transactions be included in net exports or net capital outflow? Be sure to say whether it would represent an increase or decrease in that variable.
i) An Indian buys a Samsung TV
ii) An Indian buys a share of sony stock
iii) The sony pension fund buys a bond from the Indian government
iv) A worker at a Toyota plant in Japan buys some Nagpur oranges from an Indian farmer
Chapter 18 Solutions
Principles of Macroeconomics (MindTap Course List)
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- would each of the following transactions be included in net exports or net capital outflow? Please also tell whether it would represent an increase or a decrease in that variable. i. A Pakistani buys a Sony TV. ii. A Pakistani buys a share of Sony stock. iii. The Sony pension fund buys a bond from Pakistani Treasury. iv. A worker at a Sony plant in Japan buys some mango from a Pakistani farmer.arrow_forwardWould each of the following transactions be included in net exports or net capital outflow? Be sure to say whether it would represent an increase or a decrease in that variable. A Japanese buys some durians from a Malaysian farmer.arrow_forwardUnder a closed system, when net exports equals 0, what must be true about investment spending? A Investment Consumption B Investment = Savings (C) Investment = Government Spending D) Investment Government spending - taxesarrow_forward
- Why are net exports and net capital outflow always equal? Derive the relation between savings,domestic investment, and net capital outflow using the national income accounting identity.arrow_forwardWould each of the following transactions be included in U.S. net exports or in U.S. Net capital outflow? An American buys a Sony TV.b.An American buys a share of Sony stock.c.The Sony pension fund buys a bond from the U.S. Treasuryd.A worker at a Sony plant in Japan buys some Georgia peaches form an American farmer.arrow_forward3. Net capital outflow and net exportsarrow_forward
- What is investment? How is it related to nationalsaving in a closed economy?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_forwardhow is the balance of payments linked to national saving and investment? explain.arrow_forward
- Would each of the following transactions be included in net exports or net capital outflow? Be sure to say whether it would represent an increase or a decrease in that variable. A) A Malaysian buys a Sony TV. B) A Malaysian buys a share of Sony stock. C) The Japan pension fund buys a bond from the Malaysian treasury. D) A Japanese buys some durians from a Malaysian farmer.arrow_forwardSuppose there is an increase in foreign output. Show the effect on the domestic economy . What is the effect on domestic output? On domestic net exports?arrow_forwardWhat does this graph show and what is the relationship between real exchange rate and net exports?arrow_forward
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