a) In the open economy ISLM model, describe the effects of fiscal and monetary ex- pansions with fixed and flexible exchange rates using diagrams. Compare also the effects of a fiscal expansion in an open economy ISLM model with fixed ex- change rates to a fiscal expansion in a closed economy ISLM model.
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- Real Interest A Ra te World interest rate, fo Real Exchange Ra te Ex E Ę₂ Supply of Loare ble Funds Derrand for Loa rable Funds Quantity of Loanable Funds Supply of Canadian Dollars (5-1) D₁ Do Quantity of Dollars Refer to the Figure 13-2. Suppose that these diagrams refer to Canada. If the interest rate was initially at r0 and Japan voluntarily restricted its exports to Canada, what would happen to the interest rate? a. It would stay at r0. O b. It would decrease because supply would shift right. OC. It would increase because supply would shift left. O d. It would decrease because demand would shift left. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2. In autarky, the relative price of G1 is 1/3 in country A, and 2/3 in country B. At the trade equilibrium, there is no trade between A and B. country A receives higher real wage in terms of G1. O the world relative price of G1 can be any value from 1/3 to 2/3, depending on the relative size of the countries. country B imports G2.A4 In the Ricardian model, the opening of trade raises the real wage in terms of the imported good without reducing it in terms of the exported good, so workers should favor trade. But workers facing import competition usually oppose trade, so there is something wrong with the model
- If the income in Mexico increases gradually, then most likely Mexico will import goods and services from other countries. more O the same amount less O either more or less depending on political circumstances1. Using ideas behind the specific model, intuitively explain how gains from trade for the overall economy do not necessarily translate into gains for every group within the economy. In the model, what are definite winners and losers. For whom are the gains unclear? 2. Briefly explain why the specific factors model is often considered a ‘short-run’ model. Give an example of a situation where it may also be valid for the ‘long-run’. 3. Briefly and intuitively explain the mechanisms and main results of the Heckscher-Ohlin Model. 4. In the context of the Heckscher-Ohlin Model, briefly explain Leontief’s Paradox and give examples of how the model can be reconciled with his finding. 5. Why is the bilateral trade balance not necessarily a good measure of the trade relationship between two countries? 6. Consider the (‘long run’) effects of inward labor migration in the Heckscher- Ohlin Model. Assume that the country trades and the relative price of two goods X and Y stays constant. Assume X…Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy. Living In an especially large country Having a domestic investment rate much higher than the domestic savings rate Having many other large economies geographically nearby Having an especially large budget deficit Having countries with a tradition of strong protectionist legislation shutting out imports
- In what way does comparing a countrys exports to GDP reflect its degree of globalization?Refer to the graph. The movement from point 1 to point 2 is stimulated by a disequilibrium in which there is domestic and O A. unemployment; trade deficit O B. overemployment; trade deficit OC. unemployment; trade surplus O D. overemployment; trade surplus O E. inflation; unemployment Exchange Rate, E |↑ EP/P |↓ XX¹ Domestic Spending, A Xx² <= 2Answer the following questions 1.a. Today many Central Banks around the World are thinking of increasing interestrates. Why? What could be the dangers of increasing those interest rates toomuch?1.b.What will happen to the trade balance and the real exchange rate of a smallopen economy when govemment purchases increase, such as during a war?Does your answer depend on whether this is a local war or a global war? Onthose grounds, In the current situation of the Russian invasion, what shouldhappen between the dollar and the Euro?
- A corporate treasurer tells you that he has just negotiated a five-year loan at a competitivefixed rate of interest of 5.2%. The treasurer explains that he achieved the 5.2% rate byborrowing at six-month LIBOR plus 150 basis points and swapping LIBOR for 3.7%. He goeson to say that this was possible because his company has a comparative advantage in thefloating-rate market. What has the treasurer overlooked? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Question 2 of 24 Y Hint Check Answer Suppose that Saudi Arabia produces 10,000,000 barrels of oil and 1,000 bushels of wheat each week. Suppose that China produces 13923 barrels of oil and 13923 bushels of wheat each week. In autarky, what is the largest amount of wheat Saudi Arabia can consume every week? amount of wheat per week: bushels What does the term autarky refer to? O a major argument against globalization a situation where one country does not engage in trade with other countries government policies meant to reduce international trade 9 O the process of negotiating terms of trade between two countries privacy policy terms of use contact us help about us careers F12 F11 F10 F9 F8 F7 F6 D00 F4 F5 F3Which of the four IS-LM models in the figure below represents the results of a fall in exogenous export spending? je je OB O D O C O A ye ye' A Ye Ye' C LM IS LM IS IS' Y IS' Y je je Je ye' ye B LM D IS' * LM IS IS Y Y