Q1: There are two equations for macroeconomic equilibrium in an economy. State them Show (mathematically) that Savings equals Investment when expenditure equals income What type of economy would you have when exports equal imports? What happens to the savings-investment relationship if exports are not equal to imports? [This can be greater than or less than]. [Hint: See video lecture on Open Economy Macroeconomics]. Note: Ensure to write out full meanings when you use abbreviations or short forms. This is key to getting full marks

Q1: There are two equations for macroeconomic equilibrium in an economy. State them Show (mathematically) that Savings equals Investment when expenditure equals income What type of economy would you have when exports equal imports? What happens to the savings-investment relationship if exports are not equal to imports? [This can be greater than or less than]. [Hint: See video lecture on Open Economy Macroeconomics]. Note: Ensure to write out full meanings when you use abbreviations or short forms. This is key to getting full marks

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the cotton (a storable commodity) futures prices are currently Expiry Month Price c/lb December 2021 83 December 2022 96 (a) Suppose an unexpected typhoon destroys cotton crops in India. This causes a downward revision in the expected global cotton production in 2022. Assuming all else equal, will demand for storage of cotton in 2021 (St) increase, decrease or stay the same? Draw a graph of the demand for storage to support your answer. (b) Using the same scenario from (a), do you expect the cotton market to still in contango, inverted, or could it be either contango or inverted? Draw a graph of supply and demand for storage to support your answer.
The outbreak of COVID-19 adversely attacks most economies. Some economists argue that the impacts on the macroeconomy mainly come from (i) the reduction in consumption and investment appetite, while others believe that the impacts mainly come from (ii) the immediate destruction of the supply-chain and production.Suppose two quarters since the outbreak of the COVID-19, changes in selected macroeconomic data of Country X can be summarized as below: Last Year This Year Annualized economic growth rate 4% -6% Unemployment rate 5% 8% Inflation rate 2% 5% Using an AD-AS model, explain whether argument (i) or (ii) above fits better to the case of Country X.
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The question is based on open economy Macroeconomics (photo attached).
5. Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis. Recall the components that make up GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C = consumption, I = investment, G = government purchases, X = exports, M = imports, and NX = net exports: Y = Also, national saving is the income of the nation that is left after paying for Therefore, national saving (S) is defined as: S = Rearranging the previous equation and solving for Y yields Y = . Plugging this into the original equation showing the…
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Answer the following: (Choose the options below) Q#5) Consider a prosperous country with an advanced economy which could invest trillions into its current capital stock – either moving “up” its current productivity “curve” (PC) or shifting to a new and higher productivity (PC) curve. Which approach is likely best for increasing the country’s living standards (Real GDP Per Person) through time? a) A continuous build-up of the current capital stock with established technology will achieve more – capital “deepening” with more capital for each worker. b) R&D that supports “cutting edge” invention and innovation will propel labor productivity to far higher levels – with higher quality capital Q#6) What is the best explanation for the correct answer to Q#5? An advanced economy will be a wealthy nation with a large capital stock and a high ratio of capital to labor. Thus, when expanding with standard capital…
5. Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis. Recall the components that make up GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C = consumption, I = investment, G = government purchases, X = exports, M = imports, and NX = net exports: Y = Also, national saving is the income of the nation that is left after paying for Therefore, national saving (S) is defined as: S = Rearranging the previous equation and solving for Y yields Y = Plugging this into the original equation showing the various…
8, Q2) Hey, need help with the following multi-part macroeconomics problem. Thank you in Advance! Many kinds of loans, like student loans and mortgages, can be taken out at either a fixed or variable rate. A fixed rate loan allows the borrower to pay the same nominal interest rate for the entire lifetime of the loan, while a variable rate loan may experience changes in in the nominal interest rate as the rate that banks charge each other for overnight loans changes. For this problem, assume that this variable nominal interest rate adjusts such that the associated real interest rate remains constant over time. In the first year, inflation is 2.75 percent and the nominal interest rate for both the fixed and variable rate loans is 5 percent. What is the real interest rate for the fixed rate loan? What about for the variable rate loan? In the second year, inflation rises to 3 percent. Calculate the nominal and real interest rates for the fixed rate and the variable rate loans…
The outbreak of COVID-19 adversely attacks most economies. Some economists argue that the impacts on the macroeconomy mainly come from (i) the reduction in consumption and investment appetite, while others believe that the impacts mainly come from (ii) the immediate destruction of the supply-chain and production. Suppose two quarters since the outbreak of the COVID-19, changes in selected macroeconomic data of Country X can be summarized as below: Last Year This Year Annualized economic growth rate 4% -6% Unemployment rate 5% 8% Inflation rate 2% 5% Assume that argument (ii) is true, briefly discuss one plausible short-run dilemma facing the central bank of Country X.
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Which of the following questions would be studied in the area of microeconomics? Select one: a. What determines the number of hours an individual works? b. Do interest rates affect net exports? c. Will an increase in government spending cause inflation? d. What portion of total spending comes from households in the economy?