Olympus is a small open economy. Which of the following statements is/are correct?1.If the government is running a budget deficit, there will also be a deficit on the trade balanceII.If Olympus is operating at long-run equilibrium and net exports are positive, then Olympus' output must be greater than the amount it isspending on consumption, Investment and government expenditureSelect one:a. Options I and II are correctOb. Neither Option I nor Option Il is correctOc Option I is correct, but Option Il is incorrectOd. Option I is incorrect, but Option II is correct.Clear my choiceIt has been noted that real money balances rise as a period of hyperinflation ends. This occurs becauseSelect one:the country's central bank stops hyperinflation by printing more money.Ob the decrease in expected inflation decreases the nominal interest rate, and this increases the quantity of real balances demanded. This allows thereal money supply to increase even as prices stabiliseO c. the decrease in inflation decreases the expected real interest rate, which raises the quantity of money demandedOd. the real interest rate rises, so people put more of their assets into money Which of the following statements is false?Select one:The proposition that growth in output is temporary and that when real GDP per capita rises above the subsistence level, a population explosioneventually brings real GDP per capita back to the subsistence level is a tenant of classical growth theoryOb The Harrod-Domar growth model suggests that growth is directly related to savings and that if a country's growth rate is 8.75%, while that samecountry's capital-output ratio is 4%, the country in question must have a savings ratio of 35%Oc New growth theory argues that because of the choices people make in the quest for profit the economy can enjoy continual economic growthOd. The Lewis model applies the assumption that disguised unemployment must not exist in the agricultural sector.

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Olympus is a small open economy. Which of the following statements is/are correct? 1. If the government is running a budget deficit, there will also be a deficit on the trade balance 11. If Olympus is operating at long-run equilibrium and net exports are positive, then Olympus' output must be greater than the amount it a spending on consumption, Investment and government expenditure Select one: Ⓒa. Options I and II are correct Ob. Neither Option I nor Option Il is correct Oc. Option I is correct, but Option II is incorrect Od. Option I is incorrect, but Option II is correct.

Olympus is a small open economy. Which of the following statements is/are correct? 1. If the government is running a budget deficit, there will also be a deficit on the trade balance 11. If Olympus is operating at long-run equilibrium and net exports are positive, then Olympus' output must be greater than the amount it a spending on consumption, Investment and government expenditure Select one: Ⓒa. Options I and II are correct Ob. Neither Option I nor Option Il is correct Oc. Option I is correct, but Option II is incorrect Od. Option I is incorrect, but Option II is correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following best explains why a fiscal expansion tends to decrease net exports? OA. An expansionary fiscal policy leads to an increase in output, an increase in the interest rate and an appreciation of the domestic currency. The appreciation causes imports to increase whereas a higher level of output increases exports. Therefore, net exports decrease. OB. Net exports, NX NX(Y, Y, E), depend negatively on domestic output, Y, and positively on the exchange rate, E. An expansionary fiscal policy leads to an increase in output but has no impact on the exchange rate. Therefore, net exports decrease. O C. An expansionary fiscal policy leads to an increase in output, an increase in the interest rate and a depreciation of the domestic currency. Both a depreciation of the domestic currency and a higher level of output combine to decrease exports and increase imports. Therefore, net exports decrease. O D. Net exports, NX NX(Y, Y, E), depend positively on domestic output, Y, and…
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Consider an open economy, where the goods market is in equilibrium when the domestic output equals the domestic and foreign demand for domestic goods. Variable Behavioral equations ($) 0.65Yd +450 Consumption Investment Government spending Imports 0.4Y-850r+ 600 4,000 0.2Y+ 300ɛ Exports Таxes Real exchange rate Foreign output Real interest rate 0.5Y -725€ 0.35Y 0.7 0.45Y 4% Suppose the real exchange rate increases to 0.75. The new value of net exports is $ (Round your answer to two decimal places.)
In periods of rapid U.S. growth, the rapid growth usually adds to large U.S. trade deficits by: O increasing U.S. national income, which increased U.S. imports. O reducing real interest rates in the United States. O increasing U.S. national income, which decreased U.S. exports. O increasing U.S. tax revenues and reducing the Federal budget deficit.
g. Use a figure to explain the potential effectiveness of fiscal policy to spur on the economy under a fixed exchange rate. Diagram is given below, to answer this question consult the textbook chapter-7] 1 OUP, Y
ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption is: C = 100 + 0.75Y Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 60 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig + Xn Instructions: Round your answers to the nearest whole number.a. What is the equilibrium level of income or real GDP for this economy? Equilibrium GDP (Y) = $ . b. What happens to equilibrium Y if Ig changes to 40? Equilibrium GDP (Y) = $ . What does this outcome reveal about the size of the spending multiplier? Spending multiplier = .
14. For this question, assume that equilibrium output is determined in the zZ - Y diagram. Further assume that policy makers' goals are (1) to achieve balanced trade (i.e., NX = 0); and (2) to achieve a target level of output, say Y". Now, suppose that the initial level of equilibrium output is equal to Y' (i.e., Y = Y") and that a trade deficit exists at this initial level of output. Which of the following policy actions would most likely enable the policy makers to achieve their two goals simultaneously? A) a reduction in government spending B) convince the country's trading partners to pursue policies that will cause an increase in foreign income (Y *) C) a reduction in the real exchange rate D) a reduction in taxes E) a simultaneous increase in government spending and reduction in the real exchange rate F) none of the above
Concerning a country's business cycle, rapid growth of production and employment is commonly associated with: Select one: O a. Small or shrinking trade deficits and current account deficits O b. Large or growing trade deficits and current account deficits Oc. Small or shrinking trade deficits and current account surpluses O d. Large or growing trade surpluses and current account surpluses
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.
pls answer question 10 only, thanks
1. Suppose in the New Keynesian open-economy model that there is a negative output gap andthe central bank decreases the current money supply.(a) Assuming that the exchange rate is flexible. Draw diagrams for the labour, goods andmoney markets, and the production function. Determine the equilibrium effects of thisdecrease in the money supply on employment, output, consumption, investment, money,real wages, the real interest rate, the price level and the exchange rate. Provide a detailedeconomic analysis explaining your results with the aid of the diagrams.(b) Repeat part (a) for the case of a fixed exchange rate.