Problem 3. An economist writing a column in a well-known paper makes the following announcement. “There are good news and bad news. The good news is Turkey had a temporary beneficial productivity shock that will increase output; the bad news is that the increase in output and income will lead domestic consumers to buy more imported goods, and our current account balance will fall." Assuming that Turkish economy is a small open economy, analyze this statement (is it true or false?, why?) taking as given that a beneficial productivity shock has indeed occurred.

Problem 3. An economist writing a column in a well-known paper makes the following announcement. “There are good news and bad news. The good news is Turkey had a temporary beneficial productivity shock that will increase output; the bad news is that the increase in output and income will lead domestic consumers to buy more imported goods, and our current account balance will fall." Assuming that Turkish economy is a small open economy, analyze this statement (is it true or false?, why?) taking as given that a beneficial productivity shock has indeed occurred.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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