Question 5 [Consider a small open economy such as Australia. If Australia’s saving rate (gross domestic saving as a % of GDP) is 15% , while its investment rate (domestic investment as a % of GDP) is 25%, the economy will experience a trade surplus, meaning that receipts from exports exceed expenditure on imports. (100 words)] Your answer: [True/False/Uncertain and explain why]

Question 5 [Consider a small open economy such as Australia. If Australia’s saving rate (gross domestic saving as a % of GDP) is 15% , while its investment rate (domestic investment as a % of GDP) is 25%, the economy will experience a trade surplus, meaning that receipts from exports exceed expenditure on imports. (100 words)] Your answer: [True/False/Uncertain and explain why]

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter2: Economic Tools And Economic Systems

Section: Chapter Questions

Problem 2.3P

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Question 5 [Consider a prosperous open economy such as Singapore. If Singapore’s saving rate (gross domestic saving as a % of GDP) is 25%, while its investment rate (domestic investment as a % of GDP) is 20%, the economy will experience a trade surplus, meaning that receipts from exports exceed expenditure on imports. Your answer: [True/False/Uncertain and explain why]
11. Question 11 options: ----------------Measures the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production.
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1. Measuring the openness of an economy The following table contains information on two hypothetical nations, Ravenia and Bearistan, that exist as part of a larger hypothetical international economy. Use the information provided to compute the openness measure for each country. Exports Imports GDP Country (Billions of dollars) (Billions of dollars) (Billions of dollars) Openness Measure Ravenia 179 56 125 Bearistan 54 58 64 Based on your calculations, you can conclude that Ravenia is relatively open than Bearistan.
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The falling American Economy will: (choose right answer) a:not affect China because of its low labor cost b:give a boost to China’s economy because they can now import from the US c:give a boost to China’s economy because they can now export to other countries d:affect China’s economy adversely because their exports to the US will fall
6-Look at a country’s Terms of Trade (T.O.T.). It is assumed that when the T.O.T. value increases the country’s wellbeing goes up, and when the T.O.T. value declines, the country’s wellbeing is reduced. Do you agree??? Explain!!! Among others you stated: “Trade between countries highly depends upon terms of trade. T.O.T. has important effects on the balance of payments or on its economic growth so the T.O.T. is used to measure the wellbeing of the country.” Further down though…you refute your previous statement by saying: “But T.O.T. should not be used to calculate wellbeing as its calculation does not show the volume of export of the country, only shows relative changes between countries….”etc.
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