Don't use Ai and chatgpt.Answer in step by step with explanation. In the open - economy macroeconomic model, thereal exchange rate does not affect net capital outflow.a. Trueb. False

A country's net flow of funds invested overseas over a specific time period, usually a year, is…

Answered: In the open - economy macroeconomic…

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter31: Open-Economy Macroeconomics: Basic Concepts

Section31.2: The Price For International transaction: Real And Nominal Exchange Rate

Problem 2QQ

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Does a higher rate of return in a nations economy, all other things being equal, affect the exchange rate of its currency? If so, how?
Suppose that Americans decide to increase theirsaving.a. If the elasticity of U.S. net capital outflow withrespect to the real interest rate is very high, willthis increase in private saving have a large orsmall effect on U.S. domestic investment?b. If the elasticity of U.S. exports with respect to thereal exchange rate is very low, will this increase inprivate saving have a large or small effect on theU.S. real exchange rate?
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provides some hypothetical data on macroeconomicaccountsforthreecountriesrepresented by A, B, and C and measured in billions of currency units. In Table, private household saving is SH, tax revenue is T, government spending is G, and investment spending is I. a. Calculate the trade balance and the net inflow of foreign saving for each country. b. State whether each one has a trade surplus or deficit (or balanced trade). c. State whether each is a net lender or borrower internationally and explain.
In the open-economy macroeconomic model, the key determinant of net capital outflow is the A. real interest rate. When the real interest rate rises, net capital outflow rises. B. real interest rate. When the real interest rate rises, net capital outflow falls. C. real exchange rate. When the real exchange rate rises, net capital outflow rises. D. real exchange rate. When the real exchange rate rises, net capital outflow falls.
1. What explains how the dollars per euro exchange rate will change in the future if the exchange rate is wxpected to rise. 2. What is addressed by the USMCA? 3. Country A has a GDP of 60,000,000 and country B has a per capita of 2,000. If the populations of countries a and b are 40,000 and 20,000 respectively, which country is most developed based on per capita GDP? 4. how can a difference in Gini coefficients for the United States and china be interpreted 5. which of the following trends have followed globalization?
Explain how the following transactions would affectU.S. net capital outflow. For each transaction, statewhether it represents direct investment or portfolioinvestment.a. An American cellular phone company establishesan office in the Czech Republic.b. Harrods of London sells stock to the GeneralMotors pension fund.c. Honda expands its factory in Marysville, Ohio.d. A Fidelity mutual fund sells its Volkswagen stockto a French investor.
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Other things the same, an increase in the U.S. interest rate causes U.S. net capital outflow to A. rise, so demand in the market for foreign-currency exchange shifts right... B. fall, so demand in the market for foreign-currency exchange shifts left. C. fall, so supply in the market for foreign-currency exchange shifts left. D. rise, so supply in the market for foreign-currency exchange shifts right..
In the open-economy macroeconomic model, if investment demand increases, then the real interest rate will _____________________ and the real exchange rate will _________________. Group of answer choices increase, increase decrease, increase increase, decrease decrease, decrease
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d. What does it mean when a country’s currency depreciates in the foreign exchange markets? e. Who wins and who loses in an economy when its currency devaluates in the foreign exchange market?

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In the open - economy macroeconomic model, the real exchange rate does not affect net capital outflow. a. True b. False