4. Net capital outflow and net exports An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true: Net Capital Outflow = Net Exports In other words, if a transaction directly affects the left side of this equation, then it must also affect the right side. The following problem will help you understand why this identity must hold. Suppose you are a software engineer living in the United States, and you just sold your latest product to a Russian consumer for RUB 7,000. Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive, regardless of the direction of change. Magnitude of Change (Rubles) Exports Imports. Net Exports Direction of Change

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Pick a good that is bought and sold internationally...the only condition is that you can find the price in the United States and the foreign price online (e.g., the iPhone sold in Mexico versus the United States).  Next, find the foreign price, domestic price, and the exchange rate before "testing" the degree to which purchasing power parity holds.    Elaborate upon why PPP might better hold for certain goods for certain countries, but not for others?  In other words, if we observe major departures from PPP, what might be the cause?

D6: Please Discuss/Calculate The Gold Standard System or the GSS (Hint: Chapter 3 in G (e) book/book). Exactly; thus: 1. Define the genesis & evolution of the GSS. 2. Define & exemplify gold parity and gold export-import points. 3. Would you prefer a globalisation GSS for the current world economy? Why? Why not?

4. Net capital outflow and net exports An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true: Net Capital Outflow = Net Exports In other words, if a transaction directly affects the left side of this equation, then :must also affect the right side. The following problem will help you understand why this identity must hold. Suppose you are a fashion designer living in the United States, and a trendy boutique in Bangkok just purchased your entire inventory for THB 90,000. Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive, regardless of the direction of change.…

9. Consider savings-investment diagrams assuming that there are two countries in the world, A and B. Initially, both countries are identical, i.e., they have the same supply of savings and demand for investment. Therefore, even as open economies, they both have balanced current accounts, i.e., neither has a deficit or surplus. Now assume that in country A, the government increases the budget deficit, shifting the supply of savings to the left. If all other curves (A s investment demand, B s savings supply, B s investment demand) stay the same, what will the effect of the increase in A's budget deficit? a. Country B will have a CA surplus. b. Country A will have a KFA deficit. c. Investment in country B will increase. d. The world real interest rate will fall.