You are given the following information about an open economy with government activity. Consumption C = 5 + 0.8Y. Imports M = 2.5 + 0.1Y. The only tax is a uniform income tax at a rate of 25 percent. Investment I, Government G, and exports X are autonomous. The initial level of National Income Y is 100, and trade is initially balanced. a) Find the values of I and G. b) Find the change in National Income Y if the autonomous part of imports increases to 5. c) Calculate the trade balance resulting from b above. d) Find the new tax rate which would be necessary to restore trade balance

Q: Let us assume that we have an open economy, and the world price is higher than the domestic price;…

A: An open economy is defined as an economy where domestic production exists but also allows…

Q: Which of the following identifies an important reason why empirical studies find that joining the…

A: In 1973, when Britain joined the European Economic Community (EEC), it had faced a substantial net…

Q: a. Identify and explain three instances where governments may intervene in trade that are relevant…

A: This can be described as a form of market in which no single producer or consumer has the power to…

Q: Price $2.50 2.00 1.50 1.00 0.50 H Sd Do 0 100 200 300 400 500 600 Quantity Refer to the graph, which…

A: Given information: We have given the domestic demand and domestic supply curve for a product.  There…

Q: infant industry tariffs:

A: Infant industries are the industries that are newly set up. The less developed take measures to…

Q: Suppose Japan is a small rice importer. At the world free trade price, Japan's domestic production…

A: The three different policies that will be able to achieve the policy goal of having domestic rice…

Q: Countries with the highest ratios of trade to GDP, calculated as (imports + exports)/2, tend to…

A: b Highest gains from trade   Trade-to-GDP ratio is refer to the indicator in the relative…

Q: If a country has a trade deficit of $30 billion, which of the following can be true? Group of answer…

A: Trade is the export and import of goods and services from one country to other.  Export are the…

Q: If the total of a nation's imports are subtracted from the total of a nations exports, the result…

A: ANS If the total of the nation’s imports is subtracted from the total of a nation’s exports, then we…

Q: Which of the following is an example of a subsidy? A) Import quota B) Excise tax C) Export subsidy…

A: Note: As per guidelines only first question will be answered.We must decide which cut from the list…

Q: n open economy is characterized by the existence of trade activities and international capital flows…

A: a) The equation is: Y=C+I+G+(X-M) Now, we will do the mathematical equation that impact of a trade…

Q: True or false questions. Need both. GDP measures the gap between a country's exports and its…

A: "Gross domestic product (GDP) measures the monetary value of the final products or services produced…

Q: Consider an economy (with no international trade) in which the price level is constant where C = 500…

A: The equilibrium level of GDP is that point where the AE (aggregate expenditure) which is a straight…

Q: Which of the following is correct? Exchange-rate-based measures of income per capita are identical…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Looking at the graph (“Figure 7.2”), would you say that belonging to the EU was on average a…

A: As we are about to discuss the effects of being an EU member, let it be clear that the joining time…

Q: 3. In 2010, the economy of the Utopia exported goods worth $232 billion and services worth another…

A: * ANSWER :-  * 3)

Q: Cosmopolitan cities are typically characterized by:   Question 12 options:   Rural locations   High…

A: ("Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: It is appropriate for a country to impose trade restrictions on exports that might endanger its…

A: Trade restrictions refer to government policies that limit or regulate the flow of goods and…

Q: Suppose that a vaccine manufacturing company owned entirely by U.S. citizens opens a new facility in…

A: a)Foreign direct investment. b)Canada GDP would increase and U.S GDP would be unaffected.

Q: A positive balance of trade is when:     A. imports are greater than exports   B. exports are…

A: The balance of trade refers to the difference between the monetary value of a country's exports and…

Q: What do we mean by social dumping and what are its possible effects on the EU labour market?…

A: Social Dumping is a set of practices on a national, international or inter corporate level, that…

Q: True or false? The European Union seeks to reduce its regional economic disparities by having…

A: European Union (EU) refers to an economic and political partnership that depicts a unique form of…

Q: M2, Every country can produce two goods-masks and wheat, using only their citizens' time. Consider…

A: Trade theory in international economics deals with explaining the mechanism of international trade…