An increase in government spending in a simple open economy leads to Fall in both budget and current account deficit An increase in the budget deficit and a fall in the current account deficit A fall in budget deficit and a rise in the current account deficit An increase in both the budget and current account deficit

An increase in government spending in a simple open economy leads to Fall in both budget and current account deficit An increase in the budget deficit and a fall in the current account deficit A fall in budget deficit and a rise in the current account deficit An increase in both the budget and current account deficit

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 43P: In 2001, the United Kingdoms economy exported goods worth 192 billion and services worth another 77...

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In 2001, the United Kingdoms economy exported goods worth 192 billion and services worth another 77 billion. It imported goods worth 225 billion and services worth Â£66 billion. Receipts of income from abroad were 140 billion while income payments going abroad were 131 billion. Government transfers from the United Kingdom to the rest of the world were 23 billion, while various U.K government agencies received payments of 16 billion from the rest of the world. Calculate the U.K. merchandise trade deficit for 2001. Calculate the current account balance for 2001. Explain how you decided whether payments on foreign investment and government transfers counted on the positive or the negative side of the current account balance for the United Kingdom in 2001.
Table 23.7 provides some hypothetical data on macroeconomic accounts for three countries represented by A. B, and C and measured in billions of currency units. In Table 23.7, private household saving is SH, tax revenue is T, government spending is G, and investment spending is Calculate the trade balance and the net inflow of foreign saving for each country. State whether each one has a trade surplus or deficit (or balanced trade). State whether each is a net lender or borrower internationally and explain.
An increase in government spending in a simple open economy leads to An increase in the budget deficit and a fall in the current account deficit Fall in both budget and current account deficit A fall in budget deficit and a rise in the current account deficit An increase in both the budget and current account deficit Next
Suppose that in the country of Mistania, investment spending increases from $1740 to $1940. There is no change in Mistania's private or public savings. According to the national saving and investment identity, what happens to the trade balance as investment spending increases? OTrade deficit goes up OTrade deficit goes down Ostays the same
Fill in the blanks with increase, decrease, no change or ambiguous. 1. Other things the same, an increase in trade deficit will 2. Other things the same, an increase in trade deficit will 3. Other things the same, an increase in budget deficit will 4. Other things the same, an increase in trade deficit will 5. Other things the same, an increase in trade surplus will 6. Other things the same, an increase in budget surplus will 7. Other things the same, an increase in social security spending will Unemployment. GDP. Unemployment. Unemployment. unemployment. GDP. GDP. 8. Other things the same, an increase in social security spending will 9. Other things the same, an increase in foreign aid will GDP. GDP.
A government uses an expenditure-reducing measure to correct a balance of payments current account deficit. In the short term, what effect would this measure have on consumer expenditure and net exports? Pick a,b,c, or d A) consumer expenditure: increase & net exports: decrease B) consumer expenditure: decrease & net exports: decrease C) consumer expenditure: decrease & net exports: increase D) consumer expenditure: increase & net exports: increase
Answer questions 18 and 19 based on the following table for a hypothetical country: Exports of goods & services Imports of goods & services Net taxes collected by domestic government Private Saving Gross Domestic Private Investment Net Unilateral transfers paid Personal Consumption Government Purchases Balance on the capital account Statistical Discrepancies 18. The hypothetical country runs a current account A) surplus; $100 B) deficit; $120 C) surplus; $150 D) none of the above 19. The hypothetical country runs a financial account A) surplus; $110 B) deficit; $130 C) surplus; $150. D) none of the above $1000 $1000 $200 $250 $120 $200 $380 $200 $0 $0 of of
Comment on the folllowing statement "Since the United States imports more than it exports it is necessary for the United States to import capital from foreign countries to finance its current account deficits."
68 Schmitt-Grohé, Uribe, Woodford 2.6 Exercises Exercise 2.1 Indicate whether the following statements are true, false, or uncertain and explain why. 1. An economy that starts with a positive net international investment position will run a trade balance deficit at some point. 2. A country has been having trade balance deficits for 45 years. Four decades ago, the country was a net creditor, but after so many trade deficits it became a debtor. Clearly, this economy will have to run trade surpluses at some point. 3. A two-period economy runs trade surpluses in both periods. It follows that the current account in period 1 can have either sign (depending on the magnitude of TB1), but the current account in period 2 must be positive.
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You have the following annual figures for the New Zealand economy. Investment expenditure $40.6 billion Net Exports $3.6 billion Net Foreign Income -$9.5 billion The current account balance is equal to $____billon (use 1 d.p. and a negative sign if the balance you have calculated is a deficit). New Zealand domestic savings is equal to $____billon (use 1 d.p.). Suppose that the government introduces a policy that bans foreign investment in New Zealand. If that happens then (everything else held constant) we would expect to see the current account balance -rise -remain the same. -fall -become harder to predict Suppose that along with the above policy, the government also wishes to see investment levels maintained. If that is to occur, what else must be happening in the economy? - The Government must raise taxes. - Firms must be offered incentives to invest. - New…
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?