Other fundamental things equal, an increase in the exchange rate value of the domestic currency will cause the current account to: A.fluctuate initially. B.equal the official settlements balance. C.move toward a long-run surplus. D. move toward a deficit.

The United States has a current account deficit equal to about 3.5 percent of GDP. Suppose that the US Government decides that it wants to reduce that to about 2.0 percent of GDP. A current account deficit means that the US is a For the US current account balance to Consequently one of these things must happen: US investment private savings net lender to exports and imports government expenditure US domestic savings must rise; and/or must fall. be balanced rise net taxes government savings net foreign income the rest of the world. (as they wish it to) then rest of the world savings must net borrower from net exporter of goods and services to MacBook Air be less than US savings fall net importer of goods and services from

Trinidad and Kenya are trading partners.  The Kenyan economy is operating at full employment, and Kenya's current account balance is zero. A.  Assume the exchange rate between the Trinidadian dollar (TD) and the Kenyan shilling (KS) changes from 1TD=82KS to 1TD=65KS.  Does the KS appreciate or depreciate against the TD? B.  Given your answer in Part A, will each of the following increase, decrease, or remain the same?      i.  The price of Kenyan goods in Trinidadian dollars      ii.  Kenya's net exports. C.  Draw a single correctly labeled graph with the long run Phillips curve for Kenya.  On the graph, show the new short run equilibrium as a result of the change in Kenya's net exports from Part Bii, labeled point X. D.  Given your answer in Part Bii, will each of the following be in deficit, surplus, or zero for Kenya?      i.  Current account balance      ii.  Financial (capital) account balance

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