5. The table below shows a country's private foreign transactions. Exports of goods and services Imports of goods and services Income from foreigners Income paid to foreigners Unilateral transfers to foreigners (net) Change in FDI by domestic residents in foreign operations Change in FDI in domestic businesses by foreign residents Foreign purchases of domestic securities Domestic purchases of foreign securities 820 750 75 135 -10 200 220 130 120 Don't forget signs!!! (a) What is the trade balance? (b) What is the balance on current account? (c)What is the balance on the financial account?

5. The table below shows a country's private foreign transactions. Exports of goods and services Imports of goods and services Income from foreigners Income paid to foreigners Unilateral transfers to foreigners (net) Change in FDI by domestic residents in foreign operations Change in FDI in domestic businesses by foreign residents Foreign purchases of domestic securities Domestic purchases of foreign securities 820 750 75 135 -10 200 220 130 120 Don't forget signs!!! (a) What is the trade balance? (b) What is the balance on current account? (c)What is the balance on the financial account?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1 . The net gain to the economy as a result of trade in Country A is $______. 2 What quantity will Country A supply to the rest of the world at P=$15? 3 What quantity will Country A supply to the rest of the world at P=$19? 4 What quantity will Country A supply to the rest of the world at P=$17? 5 What quantity will Country A supply to the rest of the world at P=$13? 6 What quantity will Country A demand from the rest of the world at P=$7? 7 What quantity will Country B demand from the rest of the world at P=$15?
Based on the Balance of Payments account presented in this table, the net exports are: a. 2300 b. -2600 c. -300 d. -200
A nation’s merchandise trade balance reflects _____. A.the value of exports of servicestrade b. in tangibles and intangibles c.the same information as its balance of payments d.trade in tangible products e.the value of imports of services
3. Trade creation and trade diversion Suppose that with free trade, the cost to the United States of importing a calculator from Mexico is $12.00, and the cost of importing a calculator from China is $10.00. A calculator produced in the United States costs $16.00. Suppose further that before NAFTA, the United States maintained a tariff of 25% against all calculator imports. Then, under NAFTA, all tariffs between Mexico and the United States are removed, while the tariff against imports from China remains in effect. Assume that the tariff does not affect the world price of calculators. In the following table, indicate which country the United States imported calculators from before NAFTA. Then indicate which country the United States imported calculators from under NAFTA. Check all that apply. (Note: Leave the row blank if the United States doesn't import from either country.) Scenario Before NAFTA Under NAFTA Stakeholder United States Imports from... Mexico China In the following…
4. Suppose that Egypt and the EU can only trade in cotton and wheat. Egyptian economy is smaller than that of the EU. The opportunity cost of 1 yard of cotton is 1.2 kg of wheat in Egypt. The world price of 1 yard of cotton is 1.1 kg of wheat. If there are no obstacles to trade, all markets are perfectly competitive and transportation is costless, then most likely in the long run. a. Egypt will import both cotton and wheat. b. Egypt will export both cotton and wheat. c. Egypt will export cotton and import wheat. d. Egypt will export wheat and import cotton. 5. For a fixed exchange rate system, if the home demand for the foreign currency increases, then a. The exchange rate is forced to change for sure. b. None of the statements is true c. The supply of the foreign currency by home central bank or treasury department would increase, so that the fixed. d. the supply of the foreign currency by foreign countries would automatically increase, so that the exchange rate
3a .Distinguish between the theories of absolute and comparative 3b. Identify THREE (3) barriers to trade and discuss why a government should or should not impose such barriers. 3c. Evaluate the structure of the Balance of Payments
7. A graphical comparison of tariffs and quotas Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of rugs to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Borzia, the government decides to impose a tariff of $3,000 per rug; in Ardon, the government implements a quota of 20 million rugs. Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for rugs as shown on the following graph. Under these conditions, the price of rugs is $5,000 per rug in each country. PRICE (Dollars per rug) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Do D₁ X 0 P... 10 20 30 50 60 70 80 40 QUANTITY (Millions of rugs) 90 S 100 (?)
Production Data Country of Joem - Production Possibilities Corn (tons) Sugar (tons) 01 2 3 4 8 6 4 2 0 Country of Annia - Production Possibilities Corn (tons) Sugar (tons) 0 1 2 3 4 16 12 8 4 0 Preferred Bundle without trade Joem Annia Corn (tons) 2 2 Sugar (tons) 4 8 SCENARIO: You work for a consulting firm that advises countries on trade policy. The countries of Joem and Annia both produce corn and sugar. You have been asked to analyze the opportunity costs and comparative advantages to recommend an efficient trading relationship. Consider the production data provided. Prepare a brief report that: 1. Calculate and compare the opportunity costs of producing 1 unit of corn and 1 unit of sugar in each country. Which country has the lower opportunity cost for each good? 2. Determine which good each country has a comparative advantage in producing sugar and which one has a comparative advantage in producing corn. Explain your analysis. 3. Recommend a trading relationship that allows the…
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Sandals Soybeans Country (Pairs per hour of labor) (Bushels per hour of labor) Peru 12 48 Uruguay 16 32 Consider the countries Peru and Uruguay. They each have 4 million labor hours available per week that they can use to produce sandals, soybeans, or a combination of both. The following table shows the amount of sandals or soybeans that can be produced using 1 hour of labor. If the two countries were to trade, a possible exchange rate would be 3 pairs of sandals to 9 bushels of soybeans. 3 pairs of sandals to 6 bushels of soybeans. 3 pairs of sandals to 3 bushels of soybeans. 3 pairs of sandals to 12 bushels of soybeans. O o o O
(Figure: Ships and Autos in Countries A and B) Two countries manufacture automobiles and ships. Based on the graphs: Country A Ships 60 Ships 50 40 S305 20 10- 12 100 0 8 6- 4 2 Jo 0 20 20 40 Autos Country B 40 Autos 60 60 80 80 100 100 Country A should specialize in ship building and Country B should specialize in automotive manufacturing. There are no advantages to trade because the lines are downward sloping. Country A should specialize in automotive manufacturing and Country B should specialize in ship building. There are no advantages to trade because Country A can produce more of both goods.
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