EBK INTERNATIONAL ECONOMICS
7th Edition
ISBN: 9780134523873
Author: Gerber
Publisher: YUZU
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Chapter 1, Problem 1SQ
To determine
Measurement of globalization on
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Globalization is the process of free trade across the borders. This means that globalization is the process of encouraging the international trade by eliminating the trade-distorting factors such as the tariffs, quotas, and so on between the countries. Thus, globalization tries to make the world market without borders and trade distortions. Economic integration due to globalization can be measured using three different approaches such as trade flows, factor movements, and convergence of prices of goods, factors, or production as well as the assets.
The trade flow includes the flow of goods and services between the economies. Thus, it will help to identify the dollar value of trade that the economy is engaging with its trading partners. The factor flow indicates the flow of labor and other factors of production between the economies, which also determine economic integration. The other important measure to calculate the international economic integration is similarity or convergence of prices in the countries. When the prices become converged, it means that globalization is successful in establishing the international economic integration. The impact can be measured by comparing the trade openness of the country with its GDP. Thus, globalization and the international economic integration can be measured in these three ways.
Economics Concept Introduction
Globalization: Globalization is the process of growing interdependence of the world economies, cultures, and population, which are made possible through the trade between the countries.
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In a small open economy with a floating exchange rate, the supply of real money balances is fixed and a rise in government spending ______
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Raises the interest rate so that net exports must fall to maintain equilibrium in the goods market.
Cannot change the interest rate so that net exports must fall to maintain equilibrium in the goods market.
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Raises the interest rate, so that income must rise to maintain equilibrium in the money market.
Suppose a country with a fixed exchange rate decides to implement a devaluation of its currency and commits to maintaining the new fixed parity. This implies (A) ______________ in the demand for its goods and a monetary (B) _______________.
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(A) expansion ; (B) contraction
(A) contraction ; (B) expansion
(A) expansion ; (B) expansion
(A) contraction ; (B) contraction
Assume a small open country under fixed exchanges rate and full capital mobility. Prices are fixed in the short run and equilibrium is given initially at point A. An exogenous increase in public spending shifts the IS curve to IS'. Which of the following statements is true?
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A new equilibrium is reached at point B.
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Chapter 1 Solutions
EBK INTERNATIONAL ECONOMICS
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