Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 8, Problem 7QP
To determine
Explain the import and export if dollar
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How does an increase in foreign income affect domestic aggregate expenditures and demand?
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Suppose after five years of sluggish growth, the economy of the European Union picks up speed. What would be the likely impact on the U.S. trade balance, GDP, and employment?
Chapter 8 Solutions
Economics (MindTap Course List)
Ch. 8.2 - Prob. 1STCh. 8.2 - Prob. 2STCh. 8.2 - The money supply has risen, but total spending has...Ch. 8.3 - Prob. 1STCh. 8.3 - Prob. 2STCh. 8.3 - Prob. 3STCh. 8.5 - Prob. 1STCh. 8.5 - Prob. 2STCh. 8 - Prob. 1QPCh. 8 - Prob. 2QP
Ch. 8 - Prob. 3QPCh. 8 - Prob. 4QPCh. 8 - Prob. 5QPCh. 8 - Prob. 6QPCh. 8 - Prob. 7QPCh. 8 - Prob. 8QPCh. 8 - Prob. 9QPCh. 8 - Prob. 10QPCh. 8 - Prob. 11QPCh. 8 - Prob. 12QPCh. 8 - Prob. 13QPCh. 8 - Prob. 14QPCh. 8 - Prob. 15QPCh. 8 - Prob. 16QPCh. 8 - Prob. 17QPCh. 8 - Prob. 18QPCh. 8 - Prob. 19QPCh. 8 - Prob. 20QPCh. 8 - Prob. 21QPCh. 8 - Prob. 1WNGCh. 8 - Prob. 2WNGCh. 8 - Prob. 3WNGCh. 8 - Prob. 4WNGCh. 8 - Prob. 5WNGCh. 8 - Prob. 6WNG
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- q. Consider the following scenarios and briefly explain how each scenario would affect price level and real GDP in Canada. Canada’s major trading partners experience severe recession. Canadian dollar depreciates in the foreign exchange market. Major technological breakthroughs lead to significant increase in productivity.arrow_forwardWill a direct increase in the price of U.S. goods relative to foreign goods lead to a change in the quantity demanded of Real GDP or to a change in Aggregate Demand? Will a change in the exchange rate that subsequently increases the price of U.S. goods relative to foreign goods lead to a change in the quantity demanded of Real GDP or to a change in Aggregate Demand?arrow_forwardWhen there is a change in price level that affects the total net exports, that is called Real money effect wealth effect ON balance of payment effect crowding out effectarrow_forward
- How can they say that "Rising prices are symptom of an expanding current supply"?arrow_forwardThe effect that a change in the price level has on a country's exports and imports is called the: Exchange rate effect. Interest rate effect. International effect. Multiplier effect.arrow_forwardExplain how changes in exchange rates impact the economy through the aggregate demand- aggregate supply (AD/AS) model. Explain how fluctuations in exchange rates can influence loans and banks.arrow_forward
- Consider the shift drawn in Graph B. In this graph: EHIF) EHIF) ERROM LY) ERRIM) ERR(F) MP ERR ERR(F) t LY) ERR MP E(H/F) EH/F) ERRH) LY) ERRH) B ERRIF) Mu D ERR ERRF) # Mu LI ERR The Home currency will depreciate and the Foreign currency will depreciate. The Home currency will appreciate and the Foreign currency will depreciate. The Home currency will appreciate and the Foreign currency will appreciate. The Home currency will depreciate and the Foreign currency will appreciate.arrow_forwardOne of the reasons given for the downward sloping aggregate demand curve is the foreign price effect. Clearly explain, step by step, how an increase in the price level will lead to a decrease in the aggregate demand, indicating a downward sloping aggregate demand curve.arrow_forwardIn your macroeconomic lectures you are often told that exchange rates and interest rates are important for macroeconomic decision-making. How does an increase in Japan’s government budget deficit affect each of the following? The real interest rate in the short run in Japan. Explain. Private domestic investment in plant and equipment in Japan. Draw a correctly labeled graph of the foreign exchange market for the euro, and show the effect of the change in the real interest rate in Japan from part (a)(i) on each of the following. Supply of euros. Explain. Yen price of the euro To reverse the change in the yen price of the euro identified in part (b) (ii), should the European Central Bank buy or sell euros in the foreign exchang market? Explain.arrow_forward
- Everything else held constant, a decrease in net exports ______aggregate ________. OPTIONS: Increases; supply Decreases; demand Decreases; supply Increases; demandarrow_forwardConsider the following equation: NX(ɛ) = S - I(r*) This equation is used to draw the diagram illustrating the foreign exchange market, where there is a negative relationship between NX and ɛ; and S, - I(r*) is perfectly inelastic. Here NX is net exports, ɛ is the exchange rate, S represents the level of savings in the economy, I represent the level of investment in the economy, and r is the interest rate. a. Use a carefully labeled diagram to illustrate the effect of a contractionary fiscal policy at home on savings, interest rate, net capital outflow and the exchange rate b. Use a carefully labeled diagram to illustrate the effect of a contractionary fiscal policy abroad on savings, interest rate, net capital outflow and the exchange ratearrow_forwardUsing the ZZ/Y and NX graphs, illustrate graphically and explain what effect a decrease in consumer confidence will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria. zz shifts downwards?arrow_forward
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