Use the model of small open economy to predict what would happen to the trade balance, and the real exchange rate in response to each of the following events. Use a graph to illustrate your answer and explain the graph. Please label the graph completely, including indicating all curves in the graph and label the axes. a) A fall in consumer confidence about the future induces consumers to spend less and save more. b) A tax reform increases the incentive for business to build new factories
Use the model of small open economy to predict what would happen to the trade balance, and the real exchange rate in response to each of the following events. Use a graph to illustrate your answer and explain the graph. Please label the graph completely, including indicating all curves in the graph and label the axes. a) A fall in consumer confidence about the future induces consumers to spend less and save more. b) A tax reform increases the incentive for business to build new factories
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter1: Welcome To Economics!
Section: Chapter Questions
Problem 6SCQ: Suppose we extend the circular flow model to add imports and exports. Copy the circular flow diagram...
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Use the model of small open economy to predict what would happen to the trade balance,
and the real exchange rate in response to each of the following events. Use a graph to illustrate
your answer and explain the graph. Please label the graph completely, including indicating all
curves in the graph and label the axes.
a) A fall in consumer confidence about the future induces consumers to spend less and save
more.
b) A tax reform increases the incentive for business to build new factories
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