Suppose Country A has the same GDP as Country B, and that neither nation’s residents own factors of production used by foreign firms, nor do either nation’s firms use factors of production owned by foreign residents. Suppose that relative to Country B, depreciation, indirect business taxes, and personal income taxes in Country A are high, while welfare and Social Security payments to households in Country A are relatively low. Which country has the higher disposable personal income? Why?

Consider the following model of an economy with no international trade, and in which the price level is fixed:                                                                                           C = 40 + (8/9)∙DI                                                                                                    I = 30                                                                                                   G = 30                                                                                        Taxes = (1/8)∙GDP   where C is consumption demand, DI is disposable income, I is planned investment, G is government purchases, and all whole numbers are in billions of dollars.   Determine the equilibrium level of production (GDP) in this economy (show your work), and draw this equilibrium situation on a graph.   Use the multiplier to determine the change in equilibrium GDP that would result from an exogenous 16 billion dollar increase of government purchases. Then determine…

The services sector accounts for about 70% of Canada's GDP at this time. Go to the Trading Economics website using the button below to view the GDP performance of the services sector over the past 10 years. Note the main trends and events from the graph shown and any other important information you can obtain. On the right side of the same web page select one other major industry, except public administration and utilities, and view the GDP growth over the past 10 years. Answer the following questions: What major event(s) occurred during this period in each sector?

Q4. Suppose that Brazil initially has a higher capital rental rate (r) than the United States.   What would be the direction of foreign direct investment (FDI)? Use a world-capital-market graph to show the effects of FDI on the two countries’ rental rates of capital, GDP, and return to labor owners. Identify the net change in world output in the above graph. Discussion: what other effects could FDI cause in the recipient and source countries that are not captured in the model?   Your answer

Discuss the role of budget surpluses and trade surpluses in national saving and investment

Which of the following would not be counted in the U.S. BOP current account? Martha receives a $50 dividend check on stock she owns in business in Germany.   A wealthy Italian purchases numerous antiques in the United States for his villa.   Helen, an American oil engineer, is a paid adviser to Middle Eastern countries in the area of petroleum extraction.   General Motors Corporation owns buildings that are situated in Mexico.   France purchases a new jet fighter aircraft from the Boeing Company in the U.S.

If a country has a per capita GDP of $3,200 and it grows at a 3.1% annual rate. How long will it take, in years, to double the standard of living in the country as measured by economists? (Round your answer to include 2 decimal places.)

Q8. Assume a closed economy. Suppose the capital-output ratio is 3, the depreciation rate is 3%, and the gross savings rate is 10%. Use the Harrod-Domar growth equation to determine the rate of growth in total output. What would the gross savings rate have to be to achieve 5% growth? Why is capital the only factor of production in the Harrod-Domar model? Compare the assumptions made about the production function in the Solow model and the Harrdo-Domar model.

We showed in Eq. (2.10) that S = 1 + CA, where S is national saving, / is investment, and CA is the current account balance. Calculations of national saving and investment depend on the treatment of government investment. In the text, we treated government purchases, G, as if they were consumption expenditures. Therefore, Eq. (2.7) states that government saving is Saovt = (T - TR- INT)- G, so that (1) national saving in Eq. (2.8) is S = Y + NEP- C-G, and (2) I in Eq. (2.10) is gross private domestic investment GPDI. As mentioned in the text, a more detailed treatment recognizes that government purchases comprise consumption expenditures, which we will call GCE, and government investment, which we will call GI, so G = GCE + GI. Now define government saving as (T- TR- INT) - GCE. With this alternative definition of government saving, show that private saving plus government saving = /+ CA, where investment (/) is the sum of GPDI and GI. Here are recent values for many of the variables…

If a nation has positive Net Factor Payments and positive Net Exports   Question 48 options:   it is neither borrowing nor lending from other nations   it is lending to other nations   it is borrowing from other nations   it is both borrowing and lending from other nations