a. If the Japanese decided they no longer wanted to buy US assets, what would happen in the US market for loanable funds? In particular, what would happen to US interest rates, US saving and US investment? And what happen to NCO ? b. What would happen in the market for foreign currency exchange? In particular, what would happen to the value of the dollar (exchange rate) and the US trade balance? Explain

a. If the Japanese decided they no longer wanted to buy US assets, what would happen in the US market for loanable funds? In particular, what would happen to US interest rates, US saving and US investment? And what happen to NCO ? b. What would happen in the market for foreign currency exchange? In particular, what would happen to the value of the dollar (exchange rate) and the US trade balance? Explain

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Production And Growth

Section: Chapter Questions

Problem 5PA

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If a country is running a government budget surplus, why is (T - G) on the left side of the saving-investment identity?
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3.a. If a country experiences a substantial increase in Net Capital Inflow, how do you think themarket of loanable funds will change in that country? Drawing a diagram explain whathappens to interest rate. b. Your friend tells you that he has read in an article that a country’s private sector might getinto trouble if the government keeps on borrowing from the private sector. Drawing adiagram for the markets of loanable finds, show your friend why this might be the case. Alsoreport the name of this phenomenon.
Explain how the following transactions would affectU.S. net capital outflow. For each transaction, statewhether it represents direct investment or portfolioinvestment.a. An American cellular phone company establishesan office in the Czech Republic.b. Harrods of London sells stock to the GeneralMotors pension fund.c. Honda expands its factory in Marysville, Ohio.d. A Fidelity mutual fund sells its Volkswagen stockto a French investor.
Kindly answer this question as soon as you can For each of the following, specify whether the foreign direct investment is horizontal or vertical; in addition, describe whether that investment represents an FDI inflow or outflow from the countries that are mentioned. a. McDonald’s (a U.S. multinational) opens up and operates new restaurants in Europe. b. Total (a French oil multinational) buys ownership and exploration rights to oil fields in Cameroon. c. Volkswagen (a German multinational auto producer) opens some new dealerships in the United States. (Note that, at this time, Volkswagen does not produce any cars in the United States.) d. Nestlé (a Swiss multinational producer of foods and drinks) builds a new production factory in Bulgaria to produce Kit Kat chocolate bars. (Kit Kat bars are produced by Nestlé in 17 countries around the world.)
The following graphs depict the market for loanable funds and the relationship between the real interest rate and the level of net capital outflow (NCO) measured in terms of the Mexican currency, the peso. The Market for Loanable Funds in MexicoDemandSupply012345678987654321REAL INTEREST RATE (Percent)LOANABLE FUNDS (Billions of pesos)Demand Supply Mexican Net Capital OutflowNCO-4-3-2-10123456987654321REAL INTEREST RATE (Percent)NET CAPITAL OUTFLOW (Billions of pesos)NCO Complete the first row of the table to reflect the state of the markets in Mexico. Real Interest Rate Net Capital Outflow (NCO) (Percent) (Billions of pesos) Initial state After capital flight Now, suppose that Mexico experiences a sudden bout of political turmoil, which causes world financial markets to become uneasy. Because people now view Mexico as unstable, they decide to pull some of their assets out of Mexico and put them into more…
10. In Mankiw's model of a small open economy, domestio interest rates are set by the world's market for loanable funds, rather than by domestic saving and investment. a. What are the two simplifying assumptions in the model that disconnect domestic interest rates from domestic saving and investment? b. What is determined by domestic saving and investment in the model?
Please Draw a diagram for Saving and Investmetn in a small open economy. Assume the world real interest rate is BELOW the closed equilibrium interest rate for a random country that you drew. Is this country a foreign borrower or foreign lender in the world? Please explain what the intuition for the investment and savings functinos.. Like the say for a Home investors and the Home savers. Please draw out an image i am a visual learner and that is what will help me understand it best.
7. For each of the following, specify whether the foreign direct investment is hori- zontal or vertical; in addition, describe whether that investment represents an FDI inflow or outflow from the countries that are mentioned. a. Vodafone (a U.K.-based company) plans to improve its network and services in Romania after the results in this market lagged behind other countries. b. General Electric (an American company) buys Alstom (another American company) energy assets. c. Exxon (an American company) plans the construction of new delayed coker unit in Belgium. d. PetroChina (a Chinese company) plans to invest in global oil and natural gas assets in a venture in Western Australia.
“The result of the war that happened in Country A, it made Country A has negative public saving which is reduces national saving (the sum of public and private saving)”. Based on this information, explain (Show it with the graph) what happen in the market for loanable funds and the market for foreign currency exchange
“The result of the war that happened in Country A, itmade Country A has negative public saving which isreduces national saving (the sum of public and privatesaving)”. Based on this information, Country A experienced __________ and explain what happen in the market for loanable funds and the market for foreign currency exchange (Show it with the graph)!
Question 1:In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratiois about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has beenin a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-staterelationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the GoldenRule level of capital. What will the marginal product of capital be at the Golden Rule steadystate? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product…