PRINC OF ECONOMICS PKG >CUSTOM<
7th Edition
ISBN: 9781305018549
Author: Mankiw
Publisher: CENGAGE C
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Question
Chapter 31, Problem 2PA
Sub part (a):
To determine
Net export and net capital outflow.
Sub part (b):
To determine
Net export and net capital outflow.
Sub part (c):
To determine
Net export and net capital outflow.
Sub part (d):
To determine
Net export and net capital outflow.
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Would each of the following transactions be includedin U.S. net exports or in U.S. net capital outflow?Indicate whether it would represent an increase or adecrease in that variable.a. An American buys a Sony TV.b. An American buys a share of Sony stock.c. The Sony pension fund buys a bond from theU.S. Treasury.d. A worker at a Sony plant in Japan buys someGeorgia peaches from an American farmer.
would each of the following transactions
be included in net exports or net capital
outflow? Please also tell whether it would
represent an increase or a decrease
in that variable.
i. A Pakistani buys a Sony TV.
ii. A Pakistani buys a share of Sony stock.
iii. The Sony pension fund buys a bond
from Pakistani Treasury.
iv. A worker at a Sony plant in Japan buys
some mango from a Pakistani
farmer.
Would each of the following transactions be included in U.S. net exports or in U.S. Net capital outflow? An American buys a Sony TV.b.An American buys a share of Sony stock.c.The Sony pension fund buys a bond from the U.S. Treasuryd.A worker at a Sony plant in Japan buys some Georgia peaches form an American farmer.
Chapter 31 Solutions
PRINC OF ECONOMICS PKG >CUSTOM<
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Similar questions
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- Purchasing Power Parity (PPP) implies that the level of exchange rates adjusts so that identical goods cost the same amount in different countries. In many cases, the PPP is violated. Briefly explain drawing on the assumptions of absolute PPP. You are the trade advisor to a multinational company with an investment of US1,500,000. The following are the rates quoted on the FOREX market. US $ to Euro 1.22/€ US$ to pounds 1.84/£ Euros to pounds 1.54/£ Calculate the cross rate and determine if a profit opportunity exists. What is the value of that profit if you decide to trade with the US$1.5 million?arrow_forwardThe following figure shows the Current Account Balance (similar to the Trade Balance) of Japan (black line) and China (red line). During their growth periods (1980s for Japan and 2000s for China), were these countries net savers or borrowers? What are some ways that the governments intervened in the foreign exchange market to keep their BOP from adjusting towards 0? 12.5 10.0 7.5 5.0 2.5 0.0 -5.0 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Organization for Economic Co-operation and Development fred.stlouisfed.org US $, Sum Over Component Sub-periods/10000000O000arrow_forwardSuppose that in Tunisia, a small open economy, savings initially exceeds investment. Due to events in the European economy, there is a decline in the world real interest rate. Using a supply and demand diagram, explain what happens in the savings and investment market in Tunisia. Be sure to show in the graph and explain what happens to net exports and net capital outflows. Assume initially that investment exceeds savings in Tunisia.arrow_forward
- How would the following transactions affectU.S. exports, imports, and net exports?a. An American art professor spends the summertouring museums in Europe.b. Students in Paris flock to see the latest movie fromHollywood.c. Your uncle buys a new Volvo.d. The student bookstore at Oxford University inEngland sells a copy of this textbook.e. A Canadian citizen shops at a store in northernVermont to avoid Canadian sales taxesarrow_forwardSuppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and with a diagram. a. What happens to the demand for dollars in the market for foreign-currency exchange? b. What happens to the value of the dollar in the market for foreign-currency exchange? What happens to U.S. net exports? с.arrow_forwardHow does an increase in domestic income affect demand for imports how does a decrease in real exchange rate affect demand for importsarrow_forward
- 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…arrow_forwardplease explain tqarrow_forwardEffect of Foreign Interest Rates - Peter Thiel. If foreign interest rates rise, this will cause the net capital outflow to increase, but it will also cause domestic interest rates to increase. Since domestic interest rates cause the net capital outflow to decrease, what will really happen to the net capital outflow: will it increase or decrease?arrow_forward
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