Suppose that the government decides to cut spending. In a three graphs diagram, show theimpact of this policy on real interest rate, national saving, investment, net capital outflows,demand for currency (NX), and supply of currency? Will the currency appreciate ordepreciate?

Q: If a country is an international borrower, then its domestic real interested rate is _________ the…

A: Answer in step 2.

Q: Y = C + I + G + NX Y=$6000 G=$1000 T=$1150 C=$200+0.75(Y−T) I=1100−50r NX=913−913ε…

A: Private saving = Y -T -C = Y -T -[200+0.75(Y−T)] = 6000-1150-[200+0.75(6000−1150)] =4850 -3837.5…

Q: In the foreign exchange​ market, when the U.S. interest rate​ rises, the supply of dollars​ ________…

A: Answer: Option A  (decreases; rises) Explanation: When the U.S. interest rate rises investors will…

Q: transse National savings & investment identity 29. If the budget deficit in a country rises, all…

A: The question is asking about the impact of an increase in a country's budget deficit on its domestic…

Q: following equations: C = 50 + .75(Y-T) I = 200 - 20r NX = 200 -50e M/P = Y -40r G = 200 T =…

A: DISCLAIMER  “Since you have asked multiple question, we will solve the first three question for you.…

Q: If the U.S. interest rate rises, the exchange rate value of the dollar ________ and net exports…

A: Net exports, the difference between exports and imports depend on exchange rate. Appreciation…

Q: The diagram to the right represents desired saving and desired investment in a domestic economy. Net…

A: Net exports refer to the difference between a country's total exports and total imports of goods and…

Q: Which of the following is a possible impact of a global saving glut on a small OPEN economy?…

A: Global saving glut: The global saving glut is an economic phenomenon that is classified by the…

Q: 23. Suppose the U.S. is operating in an open economy. Suddenly, there is a large decrease in…

A: In an economy, consumer expenditure refers to the total amount of money spent by individuals and…

Q: Please Draw a diagram for Saving and Investmetn in a small open economy. Assume the world real…

A: We draw savings and investment in the open economy and there is a difference between savings and…

Q: A country’s investment is 8, its government spends 10 and raises 9 in taxes, and its current account…

A: Country's investment is 8. i.e., I = 8Government spends 10. i.e., G = 10Government raises 9 in…

Q: An appreciation of the domestic currency relative to a foreign currency will:   A. Make domestic…

A: The question revolves around the impact of a domestic currency appreciation relative to a foreign…

Q: When net capital flows are negative,   A. net foreign investment is negative.   B. capital…

A: Capital account refers to the account of any country that measures the net capital flows in that…

Q: • Consider the long-run model of a small open economy with perfect capital mobility. araning from an…

A: An economy that in turn participates in international trade, but is considered to be small enough as…

Q: decrease; appreciate

A: The number of units of home currency that an individual needs to give up to get one unit of a…

Q: a small open economy is described by the following equations: C = 50 + .75(Y-T) I = 200 - 20r NX…

A: Disclaimer- “Since you have asked multiple questions, we will solve the first three questions for…

Q: The U.S. financial account examples are: A. payments for imports. B. net borrowing between the…

A: The financial account is part of BOP (balance of payment). It involves the claim or liability of all…

Q: If Canadian citizens decide to save a larger fraction of their incomes, which statement would best…

A: Answer b) The real interest rate decrease, the real exchange rate for dollar depreciates and…

Q: Because of the relationship between net capital outflow and net exports, the level of net capital…

A: The balance of trade is the difference between the value of a country's exports and the value of its…

Q: National and International Accounts: Income, Wealth, and the Balance of Payments - End of Chapter…

A: Macroeconomic aggregates are measurable evaluations that reflect the general performance of a…

Q: Suppose there is an increase in foreign output. Show the effect on the domestic economy . What is…

A: The amount of products and services that is produced in a certain time period is referred to as…

Q: a small open economy is described by the following equations: C = 50 + .75(Y-T) I = 200 - 20r NX…

A: DISCLAIMER  “Since you have asked multiple questions, we will solve the first three questions for…

Q: The major economic functions of the interest rate are O to provide market incentives for saving and…

A: The major economic functions of the interest rate are to provide market incentives for savings and…