Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 6, Problem 15E
To determine
Meaning of current account deficit in relation with domestic spending, production and borrowing using the
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You 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…
Explain the relationship between a current account deficit or surplus and the flow of funds.
You have the following annual figures for the New Zealand economy.
Investment expenditure $42.5 billion Government savings -$1.7 billion
The current account balance is not zero. In fact the current account deficit is $6.0 billion. What is New Zealand's actual private sector savings figure? $____billion (use 1 d.p.).
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