If the U.S government establishes a investment tax credit rule, this rule subsidizes domestic investment. How does this policy affect national saving, domestic investment, net capital outflow, the interest rate, the exchange rate, and the trade balance?

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Q: Are current account deficits necessarily undesirable? Provide a brief justification.

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Q: What is a trade deficit, and why does it hurt us to consistently run a deficit with another country?

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Q: What are the benefits and costs associated with foreign portfolio investment (FPI)?

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Q: E- 10 + 0.5Y = 160 - 50r NX = 80 - 0.1Y - e e = 50 - 0.1Y + B (r – r*) G= 10 vhere C is consumption,…

A:

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A: Balance of trade of a country denotes the imports and exports of the country.

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A: Answer: A small open economy, is an economy which is open for lending and borrowing internationally.…

Q: oreign countries start to subsidize investment by instituting an investment tax credit. a) What…

A: A tax credit is an incentive being offered which in turn allows the taxpayers for reducing the tax…

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Q: Define each of the following terms: c. Trade deficit; devaluation; revaluation

A: Trade deficit: Trade deficit can be defined as a situation where country's import exceeds its…