3. Because of decreasing the effects recession caused by Corona Outbreak, Turkish government decides to increase its spending and to decrease tax rates which causes a growth in public debt . i) What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does. ii) What happens to the Turkish real interest rate? iii) What happens to the real exchange rate?

3. Because of decreasing the effects recession caused by Corona Outbreak, Turkish government decides to increase its spending and to decrease tax rates which causes a growth in public debt . i) What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does. ii) What happens to the Turkish real interest rate? iii) What happens to the real exchange rate?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

11 Use the IS-LM-UIP model for an open economy with flexible exchange rates as a useful tool in discussion of domestic macroeconomic effects of high electricity prices, including petrol and diesel prices, and how this affects the purchasing power and economy of a country when electricity prices are 7-10 times normal
3. The Economist publishes its Own version of the PPP theorem, which it refers to as the 4. theory predicts that changes relative prices will result in change in exchange rates. in a 5. The growth rate of a country's money supply determines its likely future rate.
Please do the work handwritten if you can and include the names of the formulas used and any other rules that need to be followed when solving these problems.
2. The Ricardian Model and Argentina Below are several questions about the Ricardian Model in the context of Argentina as a small open economy (Argentina takes world prices as given). Some information about Argentina: Argentina can produce two goods: manufactures and beef. The technology to produce manufactures and beef both only use labor and they have constant marginal products of labor. The marginal product of labor in manufactures is 3. The marginal product of labor in beef production is 8. a. In autarky (i.e. no international trade) what is the relative price of beef to manufactures? b. Suppose that Argentina is a "small open economy", that is it takes world prices as given and Argentina will have no impact on international supplies and prices. If the world relative price of beef to manufactures is 1/2, will international trade benefit those in Argentina? If so, what product will Argentina export? What product will it import? c. Suppose that Argentina's labor force equals 100…
Question 10. Applying the Mundell-Fleming model analyse the impact on domestic income, interest rate, CA and KA of the following events: (a) an increase of foreign interest rate; (b) a fall of foreign demand on domestic goods. Provide an analysis for two different countries: country A with fixed exchange rate and perfect capital mobility country B with flexible exchange rate and imperfect capital mobility please do not make a long description but provide graphs and short analysis
Suppose that the federal government increases spending on national defense . Using Mundell - Fleming model for a small open economy , answer the following questions : a . How does it affect IS curve and LM curve ? explain why ? b . What are the changes in total output , exchange rate , consumption , investment and net exports of the economy ? explain why ? c . Draw Mundell - Fleming graph to demonstrate your answer ?
Consider an open economy, where the goods market is in equilibrium when the domestic output equals the domestic and foreign demand for domestic goods. Variable Behavioral equations ($) 0.65Yd +450 Consumption Investment Government spending Imports 0.4Y-850r+ 600 4,000 0.2Y+ 300ɛ Exports Таxes Real exchange rate Foreign output Real interest rate 0.5Y -725€ 0.35Y 0.7 0.45Y 4% Suppose the real exchange rate increases to 0.75. The new value of net exports is $ (Round your answer to two decimal places.)
Sub : EconomicsPls answer very fast.I ll upvote. Thank You a small open economy is described by the following equations: C = 50 + .75(Y-T) I = 200 - 20r NX = 200 -50e M/P = Y -40r G = 200 T = 200 M = 3000 P = 3 r* = 5 a. Derive and graph the IS* and LM* curves. b. Calculate the equilibrium exchange rate, level of income, and net exports c. Assume a floating exchange rate. Calculate what happens to the exchange rate, the level of income, net exports and the money supply if the government increases spending by 50. Use graph to illustrate what you find. d. Now assume fixed exchange rate. Calculate what happens to the exchange rate, the level of income, net exports and the money supply if the government increases spending by 50. Use graph to illustrate what you find.
3. According to relative PPP, if the U.S. interest rate is 9% and the Eurozone interest rate is 5%, then in the long run we would expect: A) the dollar to appreciate. B) the dollar to depreciate. C) the euro to appreciate. D) no change in the exchange rate. 4. Which of the following are explanations for sticky prices: A) long-term labor contracts. B) fixed exchange rates. C) menu costs. D) long-term labor contracts and menu costs Please answer both sir i will rate
9. Consider savings-investment diagrams assuming that there are two countries in the world, A and B. Initially, both countries are identical, i.e., they have the same supply of savings and demand for investment. Therefore, even as open economies, they both have balanced current accounts, i.e., neither has a deficit or surplus. Now assume that in country A, the government increases the budget deficit, shifting the supply of savings to the left. If all other curves (A s investment demand, B s savings supply, B s investment demand) stay the same, what will the effect of the increase in A's budget deficit? a. Country B will have a CA surplus. b. Country A will have a KFA deficit. c. Investment in country B will increase. d. The world real interest rate will fall.
pls answer question 10 only, thanks
19. Suppose consumers decide to save a smaller proportion of their income. What are the implications for the current account? The financial account?