ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Consider a small open economy that takes the world real interest rate as given. Suppose that initially the world real interest rate is less than the country’s autarky real interest rate. Now suppose there is a change in tax policy that leads to an increase in domestic investment demand. Which of the following is TRUE? a. The economy may flip from importing capital to exporting capital b. There is an increase in the quantity of domestic saving c. There is an increase in the real interest rate paid by domestic investors d. None of the other optionsarrow_forwardIf the U.S. Dollar appreciates, foreigners will find American goods more expensive because they have to spend less for those goods in USD, meaning with higher prices, the number of U.S. goods being exported will likely drop and leads to a reduction in the Gross Domestic Product (GDP). True or Falsearrow_forwardSuppose policy makers want to increase net exports (NX) and keep output (Y) constant. Which of the following policies would most likely achieve this? A.an increase in government spending B.a real depreciation C.an increase in government spending and a decrease in the real exchange rate D.a decrease in the real exchange rate and a tax increasearrow_forward
- I am a bit confused on how to identify whether the problems are decreasing/increasing in Net Exports and Net Capital Flowarrow_forwardQuestion: What is the term for a situation where a country exports more goods and services than it imports? A) Trade deficit B) Current account surplus C) Budget deficit D) Fiscal surplusarrow_forwardQuestion: How is this likely to affect economies that are heavily dependent on oil imports? a) Decrease in inflation b) Increase in their trade deficits c) Increase in their exports d) Decrease in their current account deficitsarrow_forward
- Saving-Investment Diagram Real Interest Rate, r(percent Saving Curve Investment Curve DE F GH Desired Saving and Investment (in billions of dollars) Based on the Saving-Investment Diagram, if the world real interest rate is indicated by C, then the difference between values H and D measures the net capital outflow the difference between values H and F measures the trade deficit the difference between values H and D measures the trade deficit the domestic real interest rate is indicated by B none of the abovearrow_forwardprovide full solution and explainationarrow_forwardQuestions 1-3 use the following case to determine a way to take a single product, like toilet and bundle it in such a way as to extract all of the profit at the time of the initial sale. You go to CostCo or Walmart and you see paper towel sold in a bundle and you wonder how the retailer can make any money. You do a little research and you find that the demand for paper towels is depicted by the following demand curve and marginal cost: P=$2.20 (1/10)*Q MR-$2.20 (2/10)*Q MC 0.20 where P is the price of paper towels, MC is the marginal cost of paper towels, MR is the marginal revenue of paper towels and Q is the quantity of paper towels. So you decide to try two different pricing strategies: 1) sell one roll at a time and 2) use multipart pricing to sell a bundle. Given the results for the pricing strategies in problems 1 and 2, what is your pricing decision and why?arrow_forward
- Please provide step-by-step answers with an explanationarrow_forwardWhen exports and imports are exactly equal for a country, this is called... Net imports. Trade surplus. ⒸNet exports. Trade deficit. Balanced trade.arrow_forwardA government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why such a statement is self- contradictory.arrow_forward
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