uppose tne Onited States decides to reduce export agricuiturai products, but it dde government spending. nitially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies v the fiscal deficit, thereby public saving. On the following graph, indicate the effect this has on the U.S. market for loanable funds. Supply Demand Supply Demand Quantity of Loanable Funds Real Interest Rate

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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This is the second part of the previous question I asked, I either get most right or wrong 

Given the change in the real interest rate, show the effect this has on net capital outflow.
NCO
Movable Point
NCO
Net Capital Outflow
Which of the following is true as a result of this policy? Check all that apply.
The real exchange rate will rise.
The equilibrium level of net exports will rise.
The supply of dollars in the foreign exchange market will increase.
Real Interest Rate
Transcribed Image Text:Given the change in the real interest rate, show the effect this has on net capital outflow. NCO Movable Point NCO Net Capital Outflow Which of the following is true as a result of this policy? Check all that apply. The real exchange rate will rise. The equilibrium level of net exports will rise. The supply of dollars in the foreign exchange market will increase. Real Interest Rate
Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other
government spending.
Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange
market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving
the equilibrium quantity of net exports and the trade deficit unchanged at this point.
However, the reduction in expenditure on export subsidies
the fiscal deficit, thereby
public saving.
On the following graph, indicate the effect this has on the U.S. market for loanable funds.
Supply
Demand
Supply
Demand
Quantity of Loanable Funds
Real Interest Rate
Transcribed Image Text:Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies the fiscal deficit, thereby public saving. On the following graph, indicate the effect this has on the U.S. market for loanable funds. Supply Demand Supply Demand Quantity of Loanable Funds Real Interest Rate
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