You have the following annual figures for the New Zealand economy. Investment expenditure $40.6 billion Net Exports $3.6 billion Net Foreign Income -$9.5 billion The current account balance is equal to $____billon (use 1 d.p. and a negative sign if the balance you have calculated is a deficit). New Zealand domestic savings is equal to $____billon (use 1 d.p.). Suppose that the government introduces a policy that bans foreign investment in New Zealand. If that happens then (everything else held constant) we would expect to see the current account balance -rise -remain the same. -fall -become harder to predict Suppose that along with the above policy, the government also wishes to see investment levels maintained. If that is to occur, what else must be happening in the economy? - The Government must raise taxes. - Firms must be offered incentives to invest. - New Zealand must impose foreign exchange controls and restrictions. - Either New Zealand must increase national income or reduce C and/or G
You have the following annual figures for the New Zealand economy.
Investment expenditure $40.6 billion
Net Exports $3.6 billion
Net Foreign Income -$9.5 billion
The current account balance is equal to $____billon (use 1 d.p. and a negative sign if the balance you have calculated is a deficit).
New Zealand domestic savings is equal to $____billon (use 1 d.p.).
Suppose that the government introduces a policy that bans foreign investment in New Zealand. If that happens then (everything else held constant) we would expect to see the current account balance
Suppose that along with the above policy, the government also wishes to see investment levels maintained. If that is to occur, what else must be happening in the economy?
- The Government must raise taxes.
Step by step
Solved in 4 steps
