(a) it is expected that a new invention will become available in the future). Which are the effects of this shock on the equilibrium values of the real interest rate and output? Use the equilibrium diagram for the current goods market to answer this question. Suppose that future total factor productivity (TFP) increases (e.g., because (b) described in Part (a)? Show that the future TFP shock increases the current account How will the composition of output be affected by the future TFP shock deficit. (c) reduce the current account deficit. To achieve that goal, the government plans to change the level of current public spending (i.e., G, using the notation we applied in class). Should the government increase or decrease current public spending? Justify your answer using a new equilibrium diagram for the current goods market. Suppose that the government of this small open economy wishes to

Which of the following is TRUE of an open economy? GDP = C+I+G+X- IM O GDP = C+ I+G GDP = T- TR -G GDP = SPrivate + SGovernment %3D

True of False and explain: Investment is critical to economic development. Developing countries have immature domestic financial sectors, therefore they should pursue trade policies designed to produced trade surpluses.

For an open economy, which of the following expressions represents private saving (S)? Group of answer choices investment plus tax revenues less government expenditure plus net exports, I + TG + NX I+T G NX I + G + NX GT+NXI none of the above

Consider the following equations for a small open economy for both the goods and money markets.Goods Market: C = 3000 + 0.8Yd; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000.Money market: LP = 1000 + 0.15Y; LT = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4a. Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.

Explain why a developing country with a fixed exchange rate Explain why a developing country with a fixed exchange rate and foreign exchange controls in place (perfectly immobile capital) may find itself dependent on growth in exports, foreign investment, or foreign aid to attain economic growth. Explain why a developing country with a fixed exchange rate

1 True/false questions Give a one sentence justification. 1. Adjusting for purchasing power parity tends to increase the measured income differences be- tween poor and rich countries. 2. According to the Malthusian model, an increase in productivity will lead to a larger population in the long run, but won't affect the level of income per capita in the long-run. 3. The decline in child mortality is the leading explanation for the decrease in fertility during the demographic transition. 4. Suppose that unobservable climate characteristics predict both the number of domesticable animal species and population density. Then the number of domesticable animals in a region doesn't satisfy condition 1 (relevance for being an instrumental variable for the number of years since the Neolithic transition.

Aggregate expenditure in an open economy equals a) C + I + G + S - M b) C + I + G + T - M c) C + I + G + (X - M) d) C + I + G + (M - X)

The following question is based on the international factor movement problem. Suppose the capital movement is allowed across borders and the amount of movement from home to abroad is K*K. Under such circumstance, how much is the change of the output for foreign country? (Hint: you need to calculate the foreign output before and after the capital movement) A. d+e+f+g B. d+e C. fD. d E. f+g MPKH a b с F K* d K H h MPKF

Answer These Three Sub Parts i) In an open economy, Y = C + I + G + NX. Using symbols from this identity, write anexpression that defines national saving, S, in an open economy.S = _________________________ .  ii) True or False? In an open economy, the following is always true: S = I + NCO, where I isinvestment spending and NCO is net capital outflow.  iii)  In an open economy, a country’s net capital outflow is:a.) the value of domestic assets purchased by foreigners minus the value of foreign assetspurchased by domestic residentsb.) the value of foreign assets purchased by domestic residents minus the value of domesticassets purchased by foreigners.