Problem 3. Consider a world with only two countries, which are designed to home (H) and Foreign (F). Output in each is full employment output (Y*). Home. CH=100+ 0.5YH-500r IH=300-500r GH=155 Y*H=1000 Foreign. CF = 225 +0.7YH-600r IF-250-200r GF=190 Y*F=1200 a) Write out national savings for Home and Foreign as a function of r. b) What is the equilibrium world interest rate? c) What is the equilibrium values of Consumption, National Savings, Investment and Current account for Home? d) What is the equilibrium values of Consumption, National Savings, Investment and Current account for Foreign? e) Now assume that there is an exogenous shock to investment at home due to an increase in TFP. New IH=600-500r. What happens to of Consumption, National Savings, Investment and Current account for Home? f) Under the e conditions what happens to of Consumption, National Savings, Investment and Current account for Foreign?

Problem 3. Consider a world with only two countries, which are designed to home (H) and Foreign (F). Output in each is full employment output (Y). Home. CH=100+ 0.5YH-500r IH=300-500r GH=155 YH=1000 Foreign. CF = 225 +0.7YH-600r IF-250-200r GF=190 Y*F=1200 a) Write out national savings for Home and Foreign as a function of r. b) What is the equilibrium world interest rate? c) What is the equilibrium values of Consumption, National Savings, Investment and Current account for Home? d) What is the equilibrium values of Consumption, National Savings, Investment and Current account for Foreign? e) Now assume that there is an exogenous shock to investment at home due to an increase in TFP. New IH=600-500r. What happens to of Consumption, National Savings, Investment and Current account for Home? f) Under the e conditions what happens to of Consumption, National Savings, Investment and Current account for Foreign?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 9SCQ: Would the following events usually lead to capital deepening? Why or why not? A weak economy in...

See similar textbooks

Similar questions

dar с ✰ng.cengage.com/static/nb/ui/evo/index.html?deploymentid=5981412470581061040044530160&eISBN=9780357133576&id=15 Scoutbook USPS.com®-USPS... Manage Your Walm... er Portrait Gro... CENGAGE MINDTAP Homework (Ch 24) Notebooks Calculators Perform these same calculations for 2018 and 2019, and enter the results in the following table. Large coffees Energy drinks Textbooks Total cost Price index Mind Tap - Cengage Learning X 2 W Quantity in Basket 10 Suppose the base year for this price index is 2017. S X 1 200 100 10 Between 2017 and 2018, the CSPI increased by #3 d C C Cost Price (Dollars) (Dollars) 2 20 50 1 2 100 In the last row of the table, calculate and enter the value of the CSPI for the remaining years. $ ܩ ܠܐ 4 2017 r f V 200 50 200 1,000 1,470 100 % 5 6 เด fod t % . Between 2018 and 2019, the CSPI increased by g disney plus custom.... Price Cost (Dollars) (Dollars) 1 54 1 3 120 < 10 2018 6 b Y h & 7 Price (Dollars) 3 75 1 4 150 Goldkey for NEO j 2019 8 Cost (Dollars) % E 9 k…
The company that you manage has invested Php. 5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to Php.3 million. If it would cost Php.1 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete development?
Economics 2. Suppose Country X is hit by an earthquake that destroys virtually all of the infrastructure in the capital city (roads, hospitals, schools etc.). What would we expect to happen to the current account of Country X over the next 10 years?
Please solve now without using excel. Thank you!
Assume that you know that there are only two factors, capital and labour, and that aggregate capital income = $1.25 billion aggregate labour income = $4 billion capital stock growth rate = 1.2 percent employment growth rate = 2.8 percent output growth rate = 3.7 percent. then the average annual rate of aggregate technological progress is (1) 9.00 percent. (2) -0.30 percent. (3) 7.70 percent. (4) 1.28 percent
I sincerely want the problems b,c,d to be solved. Thank you very much
The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results retaliatory actions from the other countries against the country’s products and services. This causes great loss of business in the country and results in significant portion of workers losing their jobs. 1. What kind of economic gap will start to occur (inflationary or recessionary)? 2. What part of the Federal Reserve’s congressional mandate does this scenario trigger (price stability and maximum sustainable employment)? 3. What kind of monetary policy might be helpful to stabilize the economy (expansionary or contractionary)? 4. What specific monetary policy tools does the Federal Reserve have available to use in this scenario? 5. Explain in detail, how should the Federal Reserve use each of these tools to maximize their effect…
March is Women's History Month and March 8 is International Women's Day. On your own, find out about how this celebration got started. Next, use this website to learn about a woman in history whom you have not heard of before now. Without plagiarizing from the website--that is, use all your own words-- write us a short letter of about 100 words (Begin with Dear Friends in ENG 100 and Dr. Fisher:) to tell us about three facts about this woman and to describe, specifically, why you find her story remarkable and inspiring.
Which of the following is related to the disadvantage of foreign direct investment (FDI) on decreasing the rate of unemployment of a country? A. Encourage the FDI to establish licensing arrangements for products that the local firms produce. B. Encourage the foreign firms to establish subsidiaries that produce products local firms do not produce C. Encourage the FDI that producing more high quality with cheaper price of the goods than the local one. D. Encourage the FDI that producing the same products as local firms produce.
Kindly answer in narrative form. Please cite your sources. Thank you so much!1. What are the GNP and Per capita GNP in Denmark?2. What Type of Currency does Denmark have? and what is the relation to US Currency?
Foreign Unit Labor Relative Home Good Home Unit Labor Requirement (aLi) Requirement (a*Li) Productivity Advantage (a*Li/aLi) Apples 1. 10 10 Bananas 40 Caviar 12 4. Dates 6. 12 2. Enchiladas 12 0.75 7. Given the information above in the context of a more than two good Ricardian model and the fact that the relative home wage was 4 and the nominal foreign wage was $3, what would be the world relative price of bananas be with world equilibrium in the labor market? A. $3 В. $4 С. $5 D. $12 E. None of the above. 16
a) Consider an economy in which the labour force grows by 2.7 percent per annum, while the capital stock grows by 4 percent per annum. Suppose 55 percent of national income goes to labour and 45 percent to capital. i. If the residual were R = 0, what rate of growth would the economy achieve? Calculate the value of the residual (R) if the country's actual rate of growth has been 4.5 percent ii. per annum. b) Suppose that a developing economy can be modeled with the Solow growth model. The constant returns to scale production technology is: Y(t) = K(t)“ H(1)* (A(t)L(t))* Where Y(t) is output, K(t) is physical capital, H(t) is human capital, A(t) is the level of technology, and L(t) is labour. The parameters a, º and A are positive and there is perfect competition in the markets for output and the inputs. Assume that during the 2005-2018 period, the country's growth rate averaged 8.5 percent and a recent growth-accounting study showed that the residual accounted for only 1.2 percent of…