Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 1DQ
To determine
To describe: The imbalance due to higher imports and lesser exports in US economy and the reasons thereof.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following could be a cause for imports not decreasing despite policy measures taken?
Select One:
a) Imports constitute consumer goods
b) Demand is elastic
c) Goods are luxuries
d) Imports constitutes capital goods
e) Export demand is inelastic
Hand written solutions are strictly prohibited
The economy of Ashville is currently in a macroeconomic equilibrium, as depicted by point E, in
the accompanying figure.
The main component of Ashville's exports consist of the raw materials that it derives from its
natural resources.
Suppose that the world demand for raw materials decreases sharply, resulting in a decrease in
the price of raw materials throughout the world.
The decrease in the world demand for raw materials, which is the major source of Ashville's
exports, will
the level of aggregate demand in Ashville, causing a
▼shift in
the AD curve.
The decrease in the world demand for raw materials, which implies a decrease in the level of
factor prices, leads to
in the unit cost of production in Ashville, causing a
7 shift in the AS curve.
Use the three-point curve drawing tool twice to draw and label new AS and AD curves that
shows the effect of this shock on Ashville's economy.
Carefully follow the instructions above, and only draw the required object.
The overall effect of…
Chapter 9 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
Knowledge Booster
Similar questions
- When Romania joined the European Union, its imports from other EU members increased by 22% and imports from all other countries fell by 8%. If trade with the EU countries account for 20% of Romanian imports, the total change in Romanian imports was % (if changes are negative, say X%, type in -X) and led to net trade (type in diversion or creation).arrow_forwardThe graph below is associated with a hypothetical country. Consider a decrease in aggregate demand (AD). Specifically, aggregate demand shifts to the left from AD₁ to AD2, causing the quantity of output demanded to fall at each price level. For instance, at a price level of 140, output is now $200 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 0 100 +-+ I I 200 300 400 500 OUTPUT (Billions of dollars) AD1 AD2 600 700 800 ?arrow_forwardThe following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 to AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. 170 160 150 140 - 130 AD2 120 110 AD, 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand. Change Needed to Increase AD Wealth Taxes Interest rates The value of the domestic currency relative to the foreign currency PRICE LEVELarrow_forward
- The graph below is associated with a hypothetical country. Consider a decrease in aggregate demand (AD). Specifically, aggregate demand shifts to the left from AD to AD₂, causing the quantity of output demanded to fall at each price level. For instance, at a price level of 140, output is now $200 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 8 90 0 100 AD₁ AD₂ 200 300 400 500 600 OUTPUT (Billions of dollars): 700 800 ?arrow_forwardExplain how the covid -19 virus pandemic has affected the united states economy.arrow_forward3. Why the aggregate demand curve slopes downward The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 120, and the quantity of output demanded is $500 billion. Moving up along the aggregate demand curve from point A to point B, the price level rises to 140, and the quantity of output demanded falls to $300 billion. 170 180 150 B 140 130 A 120 110 AD 100 90 100 200 300 400 500 600 700 800 REAL GDP (Billions of dollars) PRICE LEVELarrow_forward
- If the income in Mexico rises, all else the same, what will happen to the US exports to Mexico? Select the correct answer below: exports will increase exports will decrease exports will remain unchanged it cannot be determinedarrow_forwardplease answer the following questions to the best of your abilityarrow_forwardin increase in the demand for US goods imported into South africa will have the following impact in the South African market: The demand curve for dollars will shift to the left. True Falsearrow_forward
- . Then comment on at least TWO other posts. Respond to the posts indicating your agreement or disagreement with their position and why. Feel free to bring in additional references to these reply posts. How has the U.S. economy been doing in recent years? Why do you think that is? Gather relevant economic statistics, such as the growth rate of real GDP, the unemployment rate, and the inflation rate, to support your case. (Hint: use the information we’ve covered and you’ve researched in the data project about GDP, business cycles, unemployment, and inflation to build your argument). Did any of the data from the project surprise you? Which data? Why? Does this data indicate a growing, stagnant or declining economy? What does this data tell you about the health of our economy? Why? Find a current news or journal article that describes our current economy and that supports your opinion. Summarize the article and indicate how it supports your opinion. Use sound economic reasoning.arrow_forwardSuppose that a vaccine manufacturing company owned entirely by U.S. citizens opens a new facility in Canada. Answer all three parts below. In each case, carefully explain your answer. a) What sort of foreign investment would this represent? b) What would be the effect of this investment on current Canadian Gross Domestic Product (GDP) and U.S. GDP? c) What would be the effect of this investment on future per capita incomes in Canada?arrow_forwardGenerally, how does the standard of living in the United States today compare to the standard of living in other countries? To the standard of living in the United States a century ago?The Bureau of Economic Analysis, or BEA, is a government agency collecting various U.S. economy statistics. From the BEA’s website, find data for the most recent year available on U.S. exports and imports of goods and services. Is the United States running a trade surplus or deficit? Calculate the ratio of the surplus or deficit to U.S. exports.There are many people out there providing opinions on the economy. How can differences of opinion about economic policy recommendations be resolved?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning