Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Chapter 21, Problem 3P
To determine
(a)
To explain:
The way given situation will impact the US trade balance.
To determine
(b)
To explain:
The way given situation will impact the US trade balance.
To determine
(c)
To explain:
The way given situation will impact the US trade balance.
To determine
(d)
To explain:
The way given situation will impact the US trade balance.
To determine
(e)
To explain:
The way given situation will impact the US trade balance.
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The following graph depicts the supply and demand curves for U.S. dollars in the foreign exchange market.
Suppose that Japan puts quotas on all U.S. imports.
On the graph, shift either the supply of dollars curve, the demand for dollars curve, or both curves to best reflect the given scenario.
PRICE (Yen per dollar)
S
D
QUANTITY OF DOLLARS (Millions per day)
If Japan puts quotas on all U.S. Imports, the U.S. dollar
6.4.
We are looking at gas trade between Russia and the EU, assuming that both regions have upward-sloping supply curves and downward-sloping demand curves in a diagram with quantity on the horizontal axis and price on the vertical axis. To simplify the situation, we also assume that the exchange rate is constant and equal to 1 (so we do not need to differentiate between prices in Russia and the EU). In autarky equilibrium, there is a higher price in the EU than in Russia. Unless otherwise specified, there are no trade costs, and the capacity of the pipelines is not binding (i.e., with free trade, prices are initially the same in the EU and Russia). Without Nord Stream 1/2 in operation, the capacity of gas deliveries to Europe is much lower (but not zero). What happens (with the welfare of the two countries and consumer/producer surplus) if the EU stops importing Russian gas?
We are looking at gas trade between Russia and the EU, assuming that both regions have upward-sloping supply curves and downward-sloping demand curves in a diagram with quantity on the horizontal axis and price on the vertical axis. To simplify the situation, we also assume that the exchange rate is constant and equal to 1 (so we do not need to differentiate between prices in Russia and the EU). In autarky equilibrium, there is a higher price in the EU than in Russia. Unless otherwise specified, there are no trade costs, and the capacity of the pipelines is not binding (i.e., with free trade, prices are initially the same in the EU and Russia).
What happens (with welfare in the two countries and consumer/producer surplus) if the EU stops importing Russian gas?
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