Q: 1) Large current account deficits imply large financial account surpluses. True Or False?Explain.
A: The current account deficit implies that the value of product and services a country imports exceeds…
Q: Suppose that in the country of Mistania, investment spending increases from $1740 to $1940. There is…
A:
Q: What are the causes of current account deficit, and how CAD is affecting the economy of Pakistan?
A: Enormous and determined exchange and current account deficit are the absolute most consuming points…
Q: a)In the two-period small open economy model, explain how the nation makes its choices. b) In the…
A: An open economy is a kind of economy where domestic elements as well as substances in different…
Q: Comment on the following statement: "Since the United States imports more than it expona. It is…
A: The balance of payment (BOP) is the financial statement of a country which includes all its…
Q: 3. Explain the relationship between a current account deficit or surplus and the flow of funds.
A: Current account of the country shows a deficit when the country in engaged in importing more goods…
Q: Question: Consider the figure below. Which of the following statements is WRONG? S, on S, a D, Q1 Q2…
A: When the current account balance (CAB) is negative it is known as the current account deficit (CAD).…
Q: 17. If there are no statistical discrepancies, countries with current account deficits must receive…
A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…
Q: p with below homwork, Explain why each incorrect answer is incorrect and the correct answer is…
A: Current account includes export and import of goods and services, unilateral transfers and…
Q: A6. A member of the Bretton Woods system that has high unemployment and excessively large current…
A: Expenditure changing policy is stated as a macroeconomic policy that has an impact on the…
Q: n contrast to the united states, Japan has realized continuous current account surpluses. What could…
A: Current account of balance of payment shows the monetary transaction between nations which doesn't…
Q: Suppose the Current Account has a deficit of 300 and we invest 200 overseas. What inflow of foreign…
A: Following the guidelines, 1st 3 questions are answered. BOP is sum of current account, capital…
Q: If the U.S. current-account deficit in 2021 is $965.4495 billion, a. the U.S. capital-account…
A: Answer: According to the balance of payment identity, any deficit in the current account will be met…
Q: The US typically imports (M) more goods and services than it exports (X). a. Explain what this…
A: a. The main component of a country's current account balance is usually invariably its trade deficit…
Q: Why could a current account deficit stimulate an economy? List at least two reasons and explain with…
A: Current account deficit The current account deficit is a situation in the economy of a country…
Q: As a result of entering the world economy, Neverland experiences economic boom and its GDP goes up…
A: An economy's current account maintains track of its foreign dealings with the rest of the world. All…
Q: As a result of entering the world economy, Neverland experiences economic boom and its GDP goes up…
A: In the question above, it is given that : Y = 13250 C = 5000 - 1000 r + 0.25 Y = 5000 - 1000 r +…
Q: Consider the case of Turkey, an open macrocconomy with flexible exchange rates and in an initial…
A: An economy which trades without any restrictions is called an open economy. An economy with flexible…
Q: If Canada borrows more from the foreign countries than it lends to the foreign countries, then…
A: here we find the correct answer as follow;
Q: What is current account deficit? List down, with detailed explanations, what causes current account…
A: Current Account forms a part of a country's Balance of Payments (BOP). It includes trade in goods…
Q: This question is related to the concept of twin deficits. For a small economy, twin deficits are…
A: Solution: Budget deficit: It refers to excess of total expenditure over total revenue. When the…
Q: The United States’ total international transactions with other countries in 2005 were: U.S. balance…
A: The overall balance of payment can be calculated as follows: Thus, overall BOP is $13.9 billion.
Q: A7. Temporary tax cuts deteriorate current account balances in the short run.
A: The temporary tax cut is not reduced the current account deficit. due to the cut in tax, the…
Q: The United States’ total international transactions with other countries in 2005 were: U.S. balance…
A: Answer - Given in the question - U.S. Balance on current account: - $748.7 billion Financial…
Q: QUESTION 9 As a result of entering the world economy, Neverland experiences economic boom and its…
A: Y = 13250 C = 5000 - 1000r +0.25Y I = 500 - 1800r + 0.2Y Increases to G = 1900 (Lets assume Initial…
Q: Pancraziland is an open economy, whose official currency is the pound. At the end of 2019, it had a…
A: A net international investment position (NIIP) measures the gap between a nation's stock of foreign…
Q: I just need correct answer of last part with explanation. Please solve only E part. Balance of…
A: Given: Debtland’s GDP is = $650 billion Debtland's current account deficit of = $42 billion…
Q: As a result of entering the world economy, Neverland experiences economic boom and its GDP goes up…
A: The current account of an economy keeps track of the country's international transactions with the…
Q: 5 In one country, the current account deficit is at the level of 10 billion dollars. This…
A: Deficit of Currents account A deficit occurs when the amount of money leaving the country exceeds…
Q: In 2014, the United States' balance-of-trade deficit with China was about 10 times as large as the…
A: When talking about IS trade relationship with other countries, it can be said that Has has some…
Q: Question: In the open macroeconomy framework a "balance of payments deficit" implies that O a.…
A: Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: A) Which conditions are needed to show that B; = 0? B) Suppose that the country runs perpetual trade…
A: 1. The only condition that is needed to show that B2* is zero is that the economy lasts only for two…
Q: A6 describe the changes of current, capital, and financial account balances. Is the deficit of…
A: Balance Of payment Balance of payment refers to the statement of a country that shows the inward…
Q: Explain with an example why the current account and financial account balances must exactly offset…
A: The Capital Account is a type of account that is used toThe capital account of a country refers to…
Q: Concerning a country's business cycle, rapid growth of production and employment is commonly…
A: Concerning a country's business cycle, Rapid growth rates of production and employment is commonly…
Q: nagine that Neverland decided to re-establish links to the rest of the world and is now a small open…
A: The answer is - c. There is insufficient information to this question.
Q: 5 List the types of policies that can lead to a current account deficit
A: Answer to the question is as follows:
Q: Exercise 2.2 Consider a two-period economy that has at the beginning of period 1 a net foreign asset…
A: Given Information: The new foreign asset position (in period 1) = -100 Current account deficit (in…
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- Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 of Germanys GDP; private savings is 20 of GDP; and physical investment is 18 of GDP. Based on the national saving and investment identity, what is the current account balance? If the government budget surplus falls to zero, how will this affect the current account balance?(1) Consumption function: C = 100 + .8Y (2) Planned investment: I = 38 (3) Government spending: G = 75 (4) Exports: EX = 25 (5) Imports: IM = .05 Y4 (6) Disposable income: Y = Y- T (7) Taxes: T= 40 (8) Planned aggregate expenditure: AE = C+I+ G+ EX– IM (9) Definition of equilibrium income: Y = AE2. Many countries seem to be worried that they have negative trade balances with China. Is such a trade deficit harmful or beneficial to these economies?
- this question has three questions . What proportion of this country’s total gross capital formation (or investment) can be financed from national savings, and what part must be financed from external resources? What are the various forms these external resources could take? show in graph how the current account got a deficit of 12% GDP and the budget deficit of 3%. Suppose a country has a large current account deficit (in the vicinity of 12% of GDP). It has a gross capital formation rate of 28% of GDP. The country has an overall budget deficit of 3% of GDP. The share of Household and NPISHs Final Consumption Expenditure is 68% of GDP and that of General Government Final Consumption Expenditure is 12%. What proportion of this country’s total gross capital formation (or investment) can be financed from national savings and what part must be financed from external resources? What are the various forms these external resources could take?IF 4b The US has experienced large and growing current account deficits for more than 20 years, whereas Japan has experienced large and growing current account surpluses for roughly the same period. The US economy has grown at faster rates than Japan’sover the past 10 years. b. In trade negotiations with the Japanese over the large US trade deficit with Japan, the US administration has urged the Japanese government to undertake a more expansionary fiscal policy. Explain how this might affect the US trade deficit with Japan.Based on the table below, which of the following is likely to be true? a. From the first period to the second, the U.S. is using an increasing current account surplus to finance consumption. b. From the first period to the second, the U.S. is using an increasing financial account surplus to finance the larger budget deficit. c. From the first period to the second, public saving is increasing. d. From the first period to the second, the U.S. financial account deficit is increasing.
- 1) Consider a large open economy that engages in a fiscal contraction. In response to this policy change, what will happen to (a) national savings (b) the real rate of interest (c) net capital flows (d) the real exchange rate and (e) net exports?If Canada borrows more from the foreign countries than it lends to the foreign countries, then Canada must have A. a current account deficit. OB. a net capital flow. O C. a financial account surplus. D. All of the above.3) Show AD curve for closed and open economy and derive trade balance (NX) curve from there. Explain graphically how an expansionary fiscal policy may not help a low income country eliminate trade deficit. What should be done in such a case? Clearly indicate the changes.
- a Figure 1 shows the exogenous world interest rate (r*) determines the level of investment (I) and the difference between saving (S) and investment determines net capital outflow and net exports (NX) for a small open economy. What would happen to I, NX and S if: i. The government of this small open economy uses expansionary fiscal policy. ii. The government of other countries (abroad) uses contractionary fiscal policy. b Suppose the price of a cup of tea is Rs.50 in Pakistan and $2 in USA, the value of nominal exchange rate is $0.006364 per PKR. Calculate the value of real exchange rate (ε) and interprete its meaning. Also, discuss the relationship between net exports (NX) and real exchange rate. c Briefly explain the theory of purchasing power parity (PPP) with the help of example.14. Consider a country in the two-period analysis of trade imbalances experiencing a trade deficit in period I and no GNP growth between the two periods. Assuming that the country finances its trade deficits through borrowing in period I and repaying the entire loan in period 2 and the extra funds in period I are not directed into domestic investment, which of the following will be observed? a. The average standard of living in the country in period 2 will decline. b. The average standard of living in the country in period I will decline. c. The average standard of living in the country in period 2 will improve. d. The average standard of living in the country in period I will remain unaffected. e. The average standard of living in the country will remain stable over the two periods.a. In the diagram, shift the relevant curve(s) to the show the long-run effect of an increase in the trade deficit, if the accompanying capital account surplus supports investment. Price level LRAS AS X AD Price level GDP b. In the diagram, shift the relevant curve(s) to the show the long-run effect of an increase in the trade deficit, if the accompanying capital account surplus supports consumption. LRAS AS X AD GDP