Suppose that an economy is experiencing large trade deficits. According to pass-through effects, a devaluation would always improve trade balance, when: ο οιο both demand for domestic imports and exports are perfectly inelastic. both supply of domestic imports and exports are perfectly inelastic. the demand for domestic imports is perfectly inelastic and the supply of domestic exports is perfectly inelastic. the supply of domestic imports is perfectly inelastic and the demand for domestic exports is perfectly inelastic.

Suppose that an economy is experiencing large trade deficits. According to pass-through effects, a devaluation would always improve trade balance, when: ο οιο both demand for domestic imports and exports are perfectly inelastic. both supply of domestic imports and exports are perfectly inelastic. the demand for domestic imports is perfectly inelastic and the supply of domestic exports is perfectly inelastic. the supply of domestic imports is perfectly inelastic and the demand for domestic exports is perfectly inelastic.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter4: The Aggregate Economy

Section: Chapter Questions

Problem 5E

See similar textbooks

Similar questions

The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariffwill reduce South Africa's trade deficit A Because exports will be promoted and imports cannot possibly changeB Because imports will be reduced and exports cannot possibly changeC Only if the tariff has no impact on South Africa's spending or incomeD Only if the tariff leads to increased income in South Africa relative to its spending
Expansionary fiscal policy is a useful instrument which can be used to stimulate aggregate spending in an economy. In the case of an open economy, the use of this type of policy can have a significant impact on the trade balance. Discuss, with the aid of clearly labelled graphs, how such an expansionary policy decision will impact on the goods market and net exports
During the year, Japan had a current-account surplus of 98 billion. What is the gap between Japan’s national expenditure and its national income? Explain. What is the gap between Japan’s savings and its domestic investment? Explain. Suppose the Japanese government’s budget ran a 22 billion surplus during the year. What can you conclude about Japan’s private savings-investment balance for the year? Explain.
Assuming that a country has a trade deficit of $50 billion, which of the following is true: A. The country's exports are $120 billion and its imports are $180 billion B. The country's exports are $100 billion and its exports are $150 billion c. The country's imports are $120 billion and its exports are $180 billion d. The country's exports are $150 billion and its imports are $100
The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariff will reduce South Africa's trade deficit A. Because exports will be promoted and imports cannot possibly change B.Because imports will be reduced and exports cannot possibly change C.Only if the tariff has no impact on South Africa's spending or income D.Only if the tariff leads to increased income in South Africa relative to its spending
The US typically imports (M) more goods and services than it exports (X). a. Explain what this means for both the US Current Account (CA) and Capital Account (aka the Financial Account) and how the US net International Investment Position (IIP) will be affected. b. Why is a CA deficit referred to as an “excess spending” problem? Who is the US borrowing from when it engages in this “excess spending”? [Hint: use the twin-deficit identity.]
Assume that the gross domestic product is $6,000, personal disposal income is $5,100, thegovernment deficit is $200, consumption is $3,800, and the trade deficit is $100. What is the sizeof: Taxes
Who receives the greatest benefit from a trade deficit? O Foreign consumers O Domestic farmers exporting agricultural products O Domestic firms in industries with significant imports O Domestic individuals who own stock 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.
A government began 2019 with a budget surplus and a trade deficit. Due to the onset of recession, the government changed its policy and is now running a budget deficit. If all other factors hold constant, this change in policy will cause: Oa) the exchange rate and the trade deficit to increase. b) the exchange rate and the trade deficit to decrease. c) the exchange rate to decrease and the trade deficit to increase. d) the exchange rate to increase and the trade deficit to decrease. Question 5 ( At the beginning of 2019, a government had a total debt of $540 billion dollars. It ended 2019 with a $16 billion dollar budget surplus. In 2020, it experienced a budget deficit of $7 billion dollars. What is the total debt of the government equal to at the end of 2020? a) $573 billion b) $563 billion Oc) $531 billion d) $517 billion
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. b) Explain the differences of how the labour supply decision is made for households and how it is made for unions. Is it the case that the existence of unions always increases unemployment? c) Describe how the aggregate demand schedule is derived in the ASAD model un- der both fixed and flexible exchange rates. In which of the two can the position of the long-run AD schedule be changed by domestic policy?
The table below shows historical data on U.S. exports and imports of goods and services for five years. For each of these years, indicate whether the United States was running a trade surplus or deficit, and dollar amount of the surplus or deficit, and calculate the ratio as a percent of the surplus or deficit to U.S. exports. Instructions: In the event a deficit, do NOT include a negative sign (-) for either the dollar amount or the ratio (...% of exports). Enter your responses rounded to one decimal place. Year 1 2 3 4 LO 5 U.S. Exports (billions of dollars) 33.6 35.5 45.4 41.4 27.3 U.S. Imports (billions of dollars) 40.0 42.0 43.0 52.9 48.0 Surplus or deficit Deficit Deficit Surplus Deficit Deficit ▶ › ▶ Amount of surplus/deficit Surplus/ deficit as (billions of dollars) a percent of exports $ 6.4 19 6.5 18 2.4 11.5 20.7 $ $ 05 28 76 x % x % x % x %
Suppose that in the country of Mistania, investment spending increases from $1740 to $1940. There is no change in Mistania's private or public savings. According to the national saving and investment identity, what happens to the trade balance as investment spending increases? OTrade deficit goes up OTrade deficit goes down Ostays the same