Suppose that Americans decide to increase theirsaving.a. If the elasticity of U.S. net capital outflow withrespect to the real interest rate is very high, willthis increase in private saving have a large orsmall effect on U.S. domestic investment?b. If the elasticity of U.S. exports with respect to thereal exchange rate is very low, will this increase inprivate saving have a large or small effect on theU.S. real exchange rate?

Q: State what macroeconomic policy options can be used to influence the level of output and employment…

A: In the fixed exchange rate system, market value of a specfiic currency is pegged with a standard…

Q: O e. None of the above O d. The foreign interest rate goes up O c. The home interest rate goes up b.…

A: In the international market, if interest rate parity condition is true with the law of one price, it…

Q: In the foreign exchange market diagram, expansionary fiscal policy causes a small open economy's ?…

A: Expansionary fiscal policy raises the level of aggregate demand by increasing government spending or…

Q: Consider an economy that lasts for two periods, period 1 and period 2. Let TBị denotes the trade…

A:

Q: In September 2021, you needed 52 7 percent more pesos to buy one U.S dollar than you had needed in…

A: Purchase power parity Purchase power parity is the comparison between two country's basket of goods…

Q: If the U.S. interest rate rises, the exchange rate value of the dollar ________ and net exports…

A: Net exports, the difference between exports and imports depend on exchange rate. Appreciation…

Q: A decrease in Chinese demand for U.S. dollars over the past year has reduced the market equilibrium…

A: Exchange rate: - the exchange rate is the rate at which the currency of one country can be exchanged…

Q: Which of the following would increase the current account balance of the United States? O an…

A: The current account is a component of a country's balance of payments that tracks the flow of goods,…

Q: Other things the same, the purchase of a U.S. government bond by a resident of Singapore decreases…

A: Here, it is given that a resident of Singapore purchases a US government bond.

Q: If the expected future exchange rate falls, the supply of U.S. dollars and the exchange rate O A.…

A: The measure that depicts the value of one currency being measured in terms of another currency to…

Q: If a government of a country with a zero trade balance increases its budget deficit, then what will…

A: Import/export imbalances can be a decent or a terrible sign for an economy, and exchange excesses…

Q: If U.S. residents purchase $600 billion worth of foreign assets and foreigner residents purchase…

A: Net Capital outflow:- A nation's net flow of money invested overseas over a specific timeframe is…

Q: In the short run, if there is a tax cut, output will and the exchange rate will O increase;…

A: The measure that depicts the rate of one currency being measured in terms of another currency in…

Q: Suppose an economy experiences a sudden increase in the national birth rate. If everything else is…

A: The current account balance is a component of a nation's balance of payments, which measures the…

Q: Consider the small open economy of Albania that is currently running a trade deficit a world real…

A:

Q: How does a fundamental increase to the net export in a small open economy potentially impact the…

A: A fundamental increase in net exports in a small open economy can potentially impact the exchange…

Q: Consider an economy that begins with both internal and external balance. What would happen if the…

A: It would develop an excessively large current account deficit with excessive unemployment. This is…

Q: Determine which account of the Balance-of-Payments is affected the following transaction: A local…

A: The BOP shows the total value of all financial transactions, as well as commodity or service…

Q: Suppose the country of Questville imports $8488 worth of goods and services and exports $9742 worth…

A: A country's balance of trade is the total value of goods exported minus the total value of goods…

Q: On the DD curve, exchange rate depreciation causes output to because it affects a component of…

A: The curve that depicts various quantities of goods and services that are being demanded by…

Q: If a government of a country with a zero trade balance increases its budget deficit, then what will…

A: The budget balance is the variety between what a country's government procures from charges and…

Q: Determine which account of the Balance-of-Payments is affected the following transaction: A local…

A: Balance of payments are important for the economy. Track records of different transactions are kept…

Q: In the Mundell-Flemming model with floating exchange rates, explain what happens to aggregate…

A: Answer: Introduction: Mundell-Flemming model explains open economy macroeconomic adjustments under…

Q: Transfer pricing by MNCs may be a problem for host countries as a. It disadvantages MNCs realtive…

A: Transfer pricing can be a problem for the host countries because the recorded level of profits made…

Q: Consider a country with a flexible exchange rate, and which initially has a current account surplus…

A: A floating (or flexible) rate regime is one within which a country's rate fluctuates in a very wider…

Q: What makes the demand for U.S. dollars change? An increase in world demand for U.S. exports demand…

A: The expected future exchange rate refers to the anticipated value of one currency relative to…

Q: An increase in the domestic country's disposable income would Select] and would [ Select I therefore…

A: Disposable income is the difference between income left after paying for taxes and receiving…

Q: When there is political instability in another country, the United States can expect O an increase…

A: The political instability is when the government collapse due to any circumstance or not functioning…

Q: "In a small open economy with perfect capital mobility, if the government implements a fiscal…

A: When the government implements a fiscal expansion policy, it typically involves increased government…

Q: If Canadian citizens decide to save a larger fraction of their incomes, which statement would best…

A: Answer b) The real interest rate decrease, the real exchange rate for dollar depreciates and…

Q: To address a persistent current account deficit in the balance of payments, a government could…

A: Balance of Payments: The balance of payments is a systematic record of all economic transactions…

Q: he nation of Narnia had a current account deficitof $423 million and a nonreservefinancial account…

A: Answer a) Current account deficit is $423 millionNon-reserve financial account surplus is $360…

Q: What is the difference between depreciation and devaluation? O There is no difference. O…

A: Exchange rate is defined as the rate of at which one country exchanges its currency for the currency…

Q: If a country runs a deficit in its current account, it has to be financed by running a capital…

A: Current account includes the export, import, unilateral transfer payments, investment incomes. The…

Q: In an open economy under flexible exchange rates where the central bank keeps money supply fixed, a…

A: The open economy refers to the economy that is free to trade with the other economies of the world…

Q: Suppose the Indian government as part of its trade policy decides to remove tariffs or quotas. In an…

A: India's Foreign national trading policy aims to extend the country's share of world trade from this…

Q: tends to discourage firms from making physical capital investments. O Government borrowing O Large…

A: Physical capital includes tangible and man-made objects that a firm purchases or invests in for the…

Q: Which of the following statements is correct? (2)(1) When a British firm invests in a bicycle…

A: The current account records the the value of imports and exports of goods and services, payments…

Q: QUESTION 9 A trade deficit must be equivalent to domestic investment minus domestic savings. True O…

A: The balance of trade of a country is known as the difference between the value of the country's…

Q: Exchange rates are an important factor when doing business internationally. Please discuss: a.…

A: Exchange rate is the value of one currency relative to another. These exchange rates are flexible…