Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 13, Problem 8RQ
To determine
To know: Effect on net exports by expansionary fiscal
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- Given flexible exchange rates and perfect capital mobility, what will be effect of an expansionary fiscal policy on output and price? Use IS-LM and AD-SRAS-LRAS diagrams to answer this question.arrow_forwardAssuming the economy is operating below its potential output, what is the impact of an increase in net exports on real GDP ? Why is it difficult, if not impossible, for a country to boost its net exports by increasing its tariffs during a global recession?arrow_forwardDiscuss which of the following fall into the categories of consumption, investment,government expenditure and net exports from the Y= C+ I + G + NX (X - M) identity , and sheathed the impact is to increase or decrease GDP a) Charles buys a second hand textbook from Tim b) when Charles bought the book, he paid Sarah $10 to collect it from tim c) Thomas buys a new house d) your firm sells meat to Indonesia e) the fish and chips shop down the road buys fish to make meals for dinner f) the same shop buys deep fryer to fry fish for mealsarrow_forward
- Suppose after five years of sluggish growth, the economy of the European Union picks up speed. What would be the likely impact on the U.S. trade balance, GDP, and employment?arrow_forwardEverything else held constant, a decrease in net exports ______aggregate ________. OPTIONS: Increases; supply Decreases; demand Decreases; supply Increases; demandarrow_forwardImagine that in 2050, the dollar depreciates greatly against the euro. Use the ADAS model to explain the likely short run impacts on U.S. GDP and the aggregate price level. What do you anticipate to happen to U.S. consumption expenditures and U.S. employment? Explain your reasoning for each of your predictions and show graphically as appropriate.arrow_forward
- Please dont use any AI tool.arrow_forwardConsider the following open economy: C = 40 + 0.85x YD I = 1500 G = 1600 X = 240 M = 0.12x Y TR = 10 T= 0.16V If there is a $180 increase in government expenditure, what is the change in equilibrium real GDP (assuming no change in the price level)? Do not write the dollar ($) sign, and use a minus (-) in front of a decrease. Round your answer at two (2) decimals if necessary.arrow_forwardDiscuss which of the following fall into the categories of consumption, investment, government expenditure and net exports from the Y = C + I + G + NX (X – M) identity, and whether the impact is to increase or decrease GDP. When Charles bought the book, he paid Sarah $10 to collect it from Tim.arrow_forward
- q. Consider the following scenarios and briefly explain how each scenario would affect price level and real GDP in Canada. Canada’s major trading partners experience severe recession. Canadian dollar depreciates in the foreign exchange market. Major technological breakthroughs lead to significant increase in productivity.arrow_forwardConsider the shift drawn in Graph B. In this graph: EHIF) EHIF) ERROM LY) ERRIM) ERR(F) MP ERR ERR(F) t LY) ERR MP E(H/F) EH/F) ERRH) LY) ERRH) B ERRIF) Mu D ERR ERRF) # Mu LI ERR The Home currency will depreciate and the Foreign currency will depreciate. The Home currency will appreciate and the Foreign currency will depreciate. The Home currency will appreciate and the Foreign currency will appreciate. The Home currency will depreciate and the Foreign currency will appreciate.arrow_forwardWith COVID-19, many economies suffered from severe recession. To save their economies, a mix of monetary and fiscal policies was used in 2020. Explain how monetary policy and fiscal policy could be used to stimulate an economy under a recession. State their limitations under the COVID-19.arrow_forward
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