Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 10, Problem 32CTQ
Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Explain why such a statement is economically impossible.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Explain the importance of differential calculus within economics and business analysis. Provide three refernces with your answer. They can be from websites or a journals.
Analyze the graph below, showing the Gross Federal Debt as a percentage of GDP for the
United States (1939-2019). Which of the following is correct?
FRED
Gross Federal Debt as Percent of Gross Domestic Product
Percent of GDP
120
110
100
60
50
40
90
30
1940
1950
1960
1970
Shaded areas indicate US recessions
1980
1990
2000
2010
1000
Sources: OMD, St. Louis Fed
myfred/g/U
In 2019, the Federal Government of the United States had an accumulated debt/GDP higher than
100%, meaning that the amount of debt accumulated over time is higher than the value of all goods
and services produced in that year.
The debt/GDP is always positive during this period, so the Federal Government of the United States
incurred in budget deficits every year since 1939.
From the mid-40s until the mid-70s, the debt/DGP was decreasing, meaning that the Federal
Government of the United States was running a budget surplus every year during those three decades.
During the second half of the 1970s, the Federal Government…
An imaginary country estimates that their economy can be approximated by the AD/AS model
below. How can this government act to move the equilibrium to potential GDP?
LRAS
Price Level
P
Y
Real GDP
E
SRAS
AD
The AD/AS model shows that a contractionary fiscal policy is suitable, but the choice of increasing
taxes, decreasing government expenditure or doing both simultaneously is mostly political
The AD/AS model shows that increasing taxes is the best fiscal policy available.
The AD/AS model shows that decreasing government expenditure is the best fiscal policy available.
The AD/AS model shows that an expansionary fiscal policy capable of shifting the AD curve to the
potential GDP level would decrease Real GDP but increase inflationary pressures
Chapter 10 Solutions
Principles of Macroeconomics 2e
Ch. 10 - If foreign investors buy more U.S. stocks and...Ch. 10 - If the trade deficit of the United States...Ch. 10 - State whether each of the following events...Ch. 10 - In what way does comparing a countrys exports to...Ch. 10 - At one point Canadas GDP was 1,800 billion and its...Ch. 10 - The GDP for the United States is 18,036 billion...Ch. 10 - Why does the trade balance and the current account...Ch. 10 - State whether each of the following events...Ch. 10 - How does the bottom portion of Figure 23.3,...Ch. 10 - Explain the relationship between a current account...
Ch. 10 - Using the national savings and Investment...Ch. 10 - If a country is running a government budget...Ch. 10 - What determines the size of a countrys trade...Ch. 10 - If domestic Investment increases, and there is no...Ch. 10 - Why does a recession cause a trade deficit to...Ch. 10 - Both the United States and global economies are...Ch. 10 - For each of the following, indicate which type of...Ch. 10 - How did large trade deficits hurt the East Asian...Ch. 10 - Describe a scenario in which a trade surplus...Ch. 10 - The United States exports 14 of GDP while Germany...Ch. 10 - Explain briefly whether each of the following...Ch. 10 - If imports exceed exports, is it a trade deficit...Ch. 10 - What is included in the current account balance?Ch. 10 - In recent decades, has the U.S. trade balance...Ch. 10 - Does a trade surplus mean an overall inflow of...Ch. 10 - What are the two main sides of the national...Ch. 10 - What are the main components of the national...Ch. 10 - When is a trade deficit likely to work out well...Ch. 10 - Does a trade surplus help to guarantee strong...Ch. 10 - What three factors will determine whether a nation...Ch. 10 - What is the difference between trade deficits and...Ch. 10 - Occasionally, a government official will argue...Ch. 10 - A government official announces a new policy. The...Ch. 10 - If a country is a big exporter, is it more exposed...Ch. 10 - If countries reduced trade barriers, would the...Ch. 10 - Is it better for your country to be an...Ch. 10 - Many think that the size of a trade deficit is due...Ch. 10 - If you observed a country with a rapidly growing...Ch. 10 - Occasionally, a government official will argue...Ch. 10 - What is more important, a countrys current account...Ch. 10 - Will nations that are more involved in foreign...Ch. 10 - Some economists warn that the persistent trade...Ch. 10 - In 2001, the United Kingdoms economy exported...Ch. 10 - Imagine that the U.S. economy finds itself in the...Ch. 10 - Table 23.7 provides some hypothetical data on...Ch. 10 - Imagine that the economy of Germany finds itself...
Additional Business Textbook Solutions
Find more solutions based on key concepts
5. Which inventory costing method results in the lowest net income during a period of rising inventory costs?
W...
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
The amount Person X will get in one year if they have $200 today. Introduction: The difference between the valu...
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
1-13. Identify a product, either a good or a service, that will take advantage of this opportunity. Although yo...
Business Essentials (12th Edition) (What's New in Intro to Business)
An experimental composite engine block for an automobile will trim 20 pounds of weight compared with a traditio...
Engineering Economy (17th Edition)
E2-13 Identifying increases and decreases in accounts and normal balances
Learning Objective 2
Insert the mis...
Horngren's Accounting (12th Edition)
•• B.4. Consider the following linear programming problem:
Operations Management
Knowledge Booster
Similar questions
- Question 1 Coursology Consider the four policies bellow. Classify them as either fiscal or monetary policy: I. The United States Government promoting tax cuts for small businesses to prevent a wave of bankruptcies during the COVID-19 pandemic II. The Congress approving a higher budget for the Affordable Health Care Act (also known as Obamacare) III. The Federal Reserve increasing the required reserves for commercial banks aiming to control the rise of inflation IV. President Joe Biden approving a new round of stimulus checks for households I. fiscal, II. fiscal, III. monetary, IV. fiscal I. fiscal, II. monetary, III. monetary, IV. monetary I. monetary, II. fiscal, III. fiscal, IV. fiscal I. monetary, II. monetary, III. fiscal, IV. monetaryarrow_forwardConsider the following supply and demand schedule of wooden tables.a. Draw the corresponding graphs for supply and demand.b. Using the data, obtain the corresponding supply and demand functions. c. Find the market-clearing price and quantity. Price (Thousand s USD Supply Demand 2 96 1104 196 1906 296 2708 396 35010 496 43012 596 51014 696 59016 796 67018 896 75020…arrow_forwardConsider a firm with the following production function Q=5000L-2L2.a. Find the maximum production level.b. How many units of labour are needed at that point. c. Obtain the function of marginal product of labour (MRL) d. Graph the production function and the MRL.arrow_forward
- Exercise 4A firm has the following total cost function TC=100q-5q2+0.5q3. Find the average cost function.arrow_forwardA firm has the following demand function P=200 − 2Q and the average costof AC= 100/Q + 3Q −20.a. Find the profit function. b. Estimate the marginal cost function. c. Obtain the production that maximizes the profit. d. Evaluate the average cost and the marginal cost at the maximising production level.arrow_forwardRubber: Initial investment: $159,000 Annual cost: $36,000 Annual revenue: $101,000 Salvage value: $12,000 Useful life: 10 years Using the cotermination assumptions, a study period of 6 years, and a MARR of 9%, what is the present worth of the rubber alternative? Assume that the rubber alternative's equipment has a market value of $18,000 at the end of Year 6.arrow_forward
- Richard has just opened a new restaurant. Not being good at deserts, he has contracted with Carla to provide pies. Carla’s costs are $10 per pie, and she sells the pies to Richard for $25 each. Richard resells them for $50, and he incurs no costs other than the $25 he pays Carla. Assume Carla’s costs go up to $30 per pie. If courts always award expectation damages, which of the following statements is most likely to be true?arrow_forwardDifference-in-Difference In the beginning of 2001, North Dakota legalized fireworks. Suppose you are interested in studying the effect of the legalizing of fireworks on the number of house fires in North Dakota. Unlike North Dakota, South Dakota did not legalize fireworks and continued to ban them. You decide to use a Difference-in-difference (DID) Model. The numbers of house fires in each state at the end of 2000 and 2001 are as follows: Number of house fires in Number of house fires in Year North Dakota 2000 2001 35 50 South Dakota 54 64 a. What is the change in the outcome for the treatment group between 2000 and 2001? Show your working for full credit. (10 points) b. Can we interpret the change in the outcome for the treatment group between 2000 and 2001 as the causal effect of legalizing fireworks on number of house fires? Explain your answer. (10 points)arrow_forwardC. Regression Discontinuity Birth weight is used as a common sign for a newborn's health. In the United States, if a baby has a birthweight below 1500 grams, the newborn is classified as having “very low birth weight". Suppose you want to study the effect of having very low birth weight on the number of hospital visits made before the baby's first birthday. You decide to use Regression Discontinuity to answer this question. The graph below shows the RD model: Number of hospital visits made before baby's first birthday 5 1400 1450 1500 1550 1600 Birthweight (in grams) a. What is the running variable? (5 points) b. What is the cutoff? (5 points) T What is the discontinuity in the graph and how do you interpret it? (10 points)arrow_forward
- C. Regression Discontinuity Birth weight is used as a common sign for a newborn's health. In the United States, if a baby has a birthweight below 1500 grams, the newborn is classified as having “very low birth weight". Suppose you want to study the effect of having very low birth weight on the number of hospital visits made before the baby's first birthday. You decide to use Regression Discontinuity to answer this question. The graph below shows the RD model: Number of hospital visits made before baby's first birthday 5 1400 1450 1500 1550 1600 Birthweight (in grams) a. What is the running variable? (5 points) b. What is the cutoff? (5 points) T What is the discontinuity in the graph and how do you interpret it? (10 points)arrow_forwardExperiments Research suggests that if students use laptops in class, it can have some effect on student achievement. While laptop usage can help students take lecture notes faster, some argue that the laptops may be a source of distraction for the students. Suppose you are interested in looking at the effect of using laptops in class on the students' final exam scores out of 100. You decide to conduct a randomized control trial where you randomly assign some students at UIC to use a laptop in class and other to not use a laptop in class. (Assume that the classes are in person and not online) a. Which people are a part of the treatment group and which people are a part of the control group? (10 points) b. What regression will you run? Define the variables where required. (10 points)arrow_forwardExperiments Research suggests that if students use laptops in class, it can have some effect on student achievement. While laptop usage can help students take lecture notes faster, some argue that the laptops may be a source of distraction for the students. Suppose you are interested in looking at the effect of using laptops in class on the students' final exam scores out of 100. You decide to conduct a randomized control trial where you randomly assign some students at UIC to use a laptop in class and other to not use a laptop in class. (Assume that the classes are in person and not online) a. Which people are a part of the treatment group and which people are a part of the control group? (10 points) b. What regression will you run? Define the variables where required. (10 points)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning