Modern Principles: Macroeconomics 4e & Launchpad For Modern Principles Of Macroeconomics (six-month Access)
Modern Principles: Macroeconomics 4e & Launchpad For Modern Principles Of Macroeconomics (six-month Access)
4th Edition
ISBN: 9781319200336
Author: Tyler Cowen, Alex Tabarrok
Publisher: Worth Publishers
Question
Book Icon
Chapter 20, Problem 3FT

Subpart (a):

To determine

Change in reserves.

Subpart (a):

Expert Solution
Check Mark

Explanation of Solution

Change in reserves are calculated as follows:

Change in reserves = Current Account () Capital Account=10()15=10+15=+5

The change in official reserves is $5.

Economics Concept Introduction

Concept introduction:

Current account: It is the account of the exports and imports of goods and services along with the grants, unilateral payments, and aids of a country in a year. It includes all the short-term transactions.

Capital account: The capital account does not deal with the imports and exports of a country. It deals with the transactions of the purchase and the sale of foreign assets and liabilities over time, which is the financial account. Thus, it is the long-term account.

Subpart (b):

To determine

Capital account.

Subpart (b):

Expert Solution
Check Mark

Explanation of Solution

Capital account is calculated as follows:

()Capital Account= Current AccountChange in reserves=10(3)=10+3=7Capital Account=+7

The capital account is $7.

Economics Concept Introduction

Concept introduction:

Current account: It is the account of the exports and imports of goods and services along with the grants, unilateral payments, and aids of a country in a year. It includes all the short-term transactions.

Capital account: The capital account does not deal with the imports and exports of a country. It deals with the transactions of the purchase and the sale of the foreign assets and liabilities over time, which is the financial account. Thus, it is the long-term account.

Subpart (c):

To determine

Current account and capital account.

Subpart (c):

Expert Solution
Check Mark

Explanation of Solution

The current account is calculated as follows:

Current Account= IncomeExpenses=4,00012,000=8,000

The current account is -$8,000.

Since the balance of payment is balanced, the capital account must be +$8,000.

Economics Concept Introduction

Concept introduction:

Balance of Payments: It is a record of all the transactions of income flow into the country and out of the country with the rest of the world in a particular time period. Thus, it is the record of the transactions of the people of a country with the rest of the world.

Current account: It is the account of the exports and imports of goods and services along with the grants, unilateral payments, and aids of a country in a year. It includes all the short-term transactions.

Capital account: The capital account does not deal with the imports and exports of a country. It deals with the transactions of the purchase and the sale of the foreign assets and liabilities over time, which is the financial account. Thus, it is the long-term account.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Suppose a production function for a firm takes the following algebraic form: Q= 2KL - (0.3)L², where Q is the output of sweaters per day. Now suppose the firm is operating with 10 units of capital (K = 10) and 6 units of labour (L = 6). What is the output of sweaters? A. 64 sweaters per day OB. 49 sweaters per day OC. 109 sweaters per day OD. 72 sweaters per day OE. 118 sweaters per day
3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship and show using example}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creative
3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creative
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education