d) King's Landing (KL) generally runs a trade surplus. Do you think this is mainlyrelated to: (i) high foreign demand for goods made in KL; (ii) low demand forforeign goods in KL; (iii) a high saving rate relative to investment in KL; or (iv)structural barriers against imports into KL? Explain your answer. [25 marks]

(i) High foreign demand for goods made in KL:Imagine KL produces dragonscale armor, which is highly…

Answered: d) King's Landing (KL) generally runs a…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 1PA

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Similar questions

Suppose a country has an overall balance of trade so that exports of goods and services equal imports of goods and services. Does that imply that the country has balanced trade with each of its trading partners?
At one point Canadas GDP was 1,800 billion and its exports were 542 billion. What was Canadas export ratio at this time?
State whether each of the following events Involves a financial flow to the U.S. economy or away from the U.S. economy: Export sales to Germany Returns paid on past U.S. financial investments In Brazil Foreign aid from the U.S. government to Egypt Imported oil from the Russian Federation Japanese investors buying U.S. real estate
A government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why such a statement is contradictory.
Imagine that the U.S. economy finds itself in the following situation: a government budget deficit of 100 billion, total domestic savings of 1,500 billion, and total domestic physical capital investment of 1,600 billion. According to the national saving and Investment Identity, what will be the current account balance? What will be the current account balance if Investment rises by 50 billion, while the budget deficit and national savings remain the same?
Some economists warn that the persistent trade deficits and a negative current account balance that the United States has run will be a problem in the long run. Do you agree or not? Explain your answer.
What do international flows of capital have to do with trade imbalances?
If imports exceed exports, is it a trade deficit or a trade surplus? What about if exports exceed imports?
Why might Belgium, France, Italy, and Sweden have a higher export to GDP ratio than the United States?
Using the national savings and Investment identity, explain how each of the following changes (ceteris paribus) will Increase or decrease the trade balance: A lower domestic savings rate The government changes from running a budget surplus to running a budget deficit The rate of domestic Investment surges

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