a. If the Japanese decided they no longer wanted to buy US assets, what would happen in the US market for loanable funds? In particular, what would happen to US interest rates, US saving and US investment? And what happen to NCO ? b. What would happen in the market for foreign currency exchange? In particular, what would happen to the value of the dollar (exchange rate) and the US trade balance? Explain

a. If the Japanese decided they no longer wanted to buy US assets, what would happen in the US market for loanable funds? In particular, what would happen to US interest rates, US saving and US investment? And what happen to NCO ? b. What would happen in the market for foreign currency exchange? In particular, what would happen to the value of the dollar (exchange rate) and the US trade balance? Explain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Over the past decade, some of Japanese saving has been used to finance US
investment. That is, the Japanese have been buying US capital assets. Use
panel of three graphs to answer the following questions :
a. If the Japanese decided they no longer wanted to buy US assets, what
would happen in the US market for loanable funds? In particular, what would
happen to US interest rates, US saving and US investment? And what happen
to NCO ?
b. What would happen in the market for foreign currency exchange? In
particular, what would happen to the value of the dollar (exchange rate) and
the US trade balance? Explain

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