Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 19, Problem 9CQ
(a)
To determine
Recession and the current account deficit in Country U’s economy.
(b)
To determine
Recession and the current account deficit in Country U’s economy.
(c)
To determine
Improved investment opportunities abroad and the current account deficit of Country U.
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Students have asked these similar questions
a. Does the Philippines suffer a trade surplus or trade deficit for 2020 and first nine months of 2021? Explain.b. Does the Philippines suffer a current account surplus or current account deficit for 2020 and first nine months of 2021?
c. What is the status of the Philippines Foreign Direct Investments for 2020 and first nine months of 2021? Explain. What is the status of the Philippines Foreign Portfolio Investments for 2020 and first nine months of 2021? Explain.
d. What is the role of the Asia Infrastructure Investment Bank (AIIB) in the area of Global Finance? How is their financing structure different from the Asian Development Bank (ADB)?
When looking only at the import and export of services, the U.S.
a. has a trade deficit
b. has a trade surplus
c. exports virtually no services
d. has a balanced trade in services
Suppose that during a recent year for the United States, merchandise imports were $2 trillion, unilateral transfers were a net outflow of $0.2 trillion, service exports were $0.2 trillion, service imports were $0.1 trillion, and merchandise exports were $1.4 trillion.
a. What was the merchandise trade deficit?
b. What was the balance on goods and services?
c. What was the current account balance?
Chapter 19 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Economics "Pakistan is on the verge of a balance-of-payments crisis, which threatens the stability of its currency and its ability to repay debts or pay for imports." AFP (August 3", 2018) Discuss the implications of a persistent current account deficit for an open economy like Pakistan and discuss the possible solutions to reverse this deficit.arrow_forwardYou have the following annual figures for the New Zealand economy. Investment expenditure $40.6 billion Net Exports $3.6 billion Net Foreign Income -$9.5 billion The current account balance is equal to $____billon (use 1 d.p. and a negative sign if the balance you have calculated is a deficit). New Zealand domestic savings is equal to $____billon (use 1 d.p.). Suppose that the government introduces a policy that bans foreign investment in New Zealand. If that happens then (everything else held constant) we would expect to see the current account balance -rise -remain the same. -fall -become harder to predict Suppose that along with the above policy, the government also wishes to see investment levels maintained. If that is to occur, what else must be happening in the economy? - The Government must raise taxes. - Firms must be offered incentives to invest. - New…arrow_forwardWhat is the relationship between the current account and the capital account in the balance of payments? Select one: a. The current account shows all income and expenditure and the capital account shows investment and how it is funded. b. The capital account shows how a current account deficit is funded or a surplus is disbursed. c. There is no relationship between them as they measure different things. d. The current account balance is the difference between exports and imports and the capital account balance shows net foreign income.arrow_forward
- Answer the following questions after reading the case given below, What are the likely reasons of large trade deficit in Pakistan? How would you compare the trade of Pakistan with other countries in the region? What measures can be taken by the government to correct the trade deficit? Is Pakistan a closed economy in terms of trade? Comment. Pakistan ranked 8th in size of trade deficit The tenure of the previous government, from 2013 to 2018, witnessed a skyrocketing current account deficit as it increased from $2.5 billion in FY13 to $18.9 billion in FY18. The major driver was the trade deficit, which widened from $19.2 billion in 2012 to $35.6 billion in 2017, according to data extracted from the ITC’s Trademap.org. Imports increased from $43.8 billion in 2012 to $57.4 billion in 2017 and exports decreased from $24.6 billion in 2012 to $21.9 billion in 2017. Between July 2014 and June 2015, REER had increased by 8.83%. It increased by 5.54% in the prior fiscal year, FY14.…arrow_forwardIndia's Current Account. Use the following balance of payments data for India from the IMF What is India's balance on services for years 2000, 2008 and 2012? The balance on services for year 2000 is (in millions) $ __________ (Round to the nearest integer and enter any deficit with a negative sign.) The balance on services for year 2008 is (in millions) $ __________ (Round to the nearest integer and enter any deficit with a negative sign.) The balance on services for year 2012 is (in millions) $____________ (Round to the nearest integer and enter any deficit with a negative sign.)arrow_forwardWould each of the following transactions be includedin U.S. net exports or in U.S. net capital outflow?Indicate whether it would represent an increase or adecrease in that variable.a. An American buys a Sony TV.b. An American buys a share of Sony stock.c. The Sony pension fund buys a bond from theU.S. Treasury.d. A worker at a Sony plant in Japan buys someGeorgia peaches from an American farmer.arrow_forward
- Table 23.7 provides some hypothetical data on macroeconomic accounts for three countries represented by A. B, and C and measured in billions of currency units. In Table 23.7, private household saving is SH, tax revenue is T, government spending is G, and investment spending is Calculate the trade balance and the net inflow of foreign saving for each country. State whether each one has a trade surplus or deficit (or balanced trade). State whether each is a net lender or borrower internationally and explain.arrow_forwardThe GDP for the United States is 18,036 billion and its current account balance is 484 billion. What percent of GDP is the current account balance?arrow_forwardIf the trade deficit of the United States increases, how is the current account balance affected?arrow_forward
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