MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
10th Edition
ISBN: 9781319467203
Author: Mankiw
Publisher: MAC HIGHER
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Question
Chapter 6, Problem 9PA
(a)
To determine
The effect on world investment
(b)
To determine
The effect on world real interest rate
(c)
To determine
The effect on investment in Oceania
(d)
To determine
The effect on trade balance in Oceania
(e)
To determine
The effect on real exchange rate of Oceania
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Let’s assume that some foreign countries start to subsidize investment by instituting an investmenttax credit.a) What happens to world investment demand as a function of the world interest rate?b) What happens to the world interest rate?c) What happens to investment in our small open economy?d) What happens to our trade balance?e) What happens to our real exchange rate?
“Trade policies determine the size of markets for the output of firms and hence strongly influence both foreign and domestic investment. Over time, the influence of trade policies on the investment climate is growing.”
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Chapter 6 Solutions
MACROECONOMICS+ACHIEVE 1-TERM AC (LL)
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