Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 31.1, 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?
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
I am a bit confused on how to identify whether the problems are decreasing/increasing in Net Exports and Net Capital Flow
Chapter 31 Solutions
Principles of Economics (MindTap Course List)
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- 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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