Figure 3 Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow. Graph (a) Graph (b) REAL INTEREST RATE 525 d $ QUANTITY OF LOANABLE FUNDS REAL EXCHANGE RATE stay at r2. b. decrease because supply would shift right. c. increase because supply would shift left. d. decrease because demand would shift left. REAL INTEREST RATE NCO D. d NET CAPITAL OUTFLOW Graph (c) S, 5, 5, D 3 QUANTITY OF DOLLARS Refer to Figure 3. If the interest rate were initially at r2 and an import quota were imposed, the interest rate would a.

Figure 3 Refer to the following diagram of the open-economy macroeconomic model to answer the questions that follow. Graph (a) Graph (b) REAL INTEREST RATE 525 d $ QUANTITY OF LOANABLE FUNDS REAL EXCHANGE RATE stay at r2. b. decrease because supply would shift right. c. increase because supply would shift left. d. decrease because demand would shift left. REAL INTEREST RATE NCO D. d NET CAPITAL OUTFLOW Graph (c) S, 5, 5, D 3 QUANTITY OF DOLLARS Refer to Figure 3. If the interest rate were initially at r2 and an import quota were imposed, the interest rate would a.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Use the open economy macro model (the one with 3 diagrams) to illustrate the con- sequences of a crisis in all other countries in the world that makes foreigners want to bring all of their money into the United States. Make sure you tell me the following: (a) Draw the diagrams properly. (b) Tell me which curve or curves move. (c) Tell me which direction the curve or curves move in. (d) Tell me what happens to Savings in equilibrium. (e) Tell me what happens to Investment Plus Net Capital Outflow in equilibrium. (f) Tell me what happens to the Real Interest Rate in equilibrium. (g) Tell me what happens to Net Capital Outflow in equilibrium. (h) Tell me what happens to Net Exports in equilibrium.
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 ?
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4. Relative to a closed economy, it is easier in an open economy toa. pass the burden of government debt on to future generations.b. control interest rates.c. discourage private investment through government borrowing.d. confer monopoly power on key domestic industries.
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.
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3. Understand the basic financial statements, how to prepare the comparative financial statements, calculate financial ratios, analyze and interpret those ratios.
a) Discuss briefly the history, legislation, function, remittance of the CMBT (SPK). While writing your answer, focus on its mission and how the Board runs and what it does to achieve the mission.b) In a closed economy, savings and investments are interacted/coordinated.• Who are savers and investors in this closed economy?• How does financial (capital and money) market work?• How does crowding out happen?• Briefly discuss, by using I, S, G, T, X, M, how the scenario change when the economy is OPEN.
Question: A- Turkey has a flexible exchange rate regime. Discuss in detail what the effects of an expansionary fiscal policy would be on output levels under this regime.How do you think the effects of such a policy would differ under a fixed exchange rate regime? B- Turkey has a flexible exchange rate regime. Assuming perfect capital mobility, do you think it is possible to control the interest rate and the exchange rate at the same time? Please discuss in detail and explain why or why not.
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