Question 2: If the government of a small open economy wants to correct its trade deficit in the long run, which kind of policy should it pursue? Explain. 5₂ Loanable funds market Sº S*. I*.0 Iº(r) -I, S Foreign exchange market (S-1)⁰ NX*0 NX°(E) NX
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- Round the answer to the nearest decimal point (olg u jüLc alolo yo ylgzI y Hi Bashar lyad Fuad Dahabreh, when you submit this form, the owner will be able to see your name and email address. Expenditure. If G = 1100, T = 900, S = 50, and I = 90. The 1. Suppose that in our economy Income = value of Net export equal: -70 - 110 O - 240 - 250 2 Given he following information:What is a foreign trade deficit or surplus? How does this affectinterest rates?transse National savings & investment identity 29. If the budget deficit in a country rises, all else equal, what must happen to: Its level of domestic private savings? Its level of domestic private investment? Its trade deficit? Its trade surplus?
- (a) Distinguish between a government deficit and trade deficit? F7 F8 F9 F10 F11 F12 7 8what are two reasons Why is the statstic for fiscal deficits are so closely monitired in small fixed exchange rate economies?16. The macroeconomic view of a trade deficit implies that, other things equal, the imposition of a tariffwill reduce South Africa's trade deficit A Because exports will be promoted and imports cannot possibly changeB Because imports will be reduced and exports cannot possibly changeC Only if the tariff has no impact on South Africa's spending or incomeD Only if the tariff leads to increased income in South Africa relative to its spending
- IF 4b The US has experienced large and growing current account deficits for more than 20 years, whereas Japan has experienced large and growing current account surpluses for roughly the same period. The US economy has grown at faster rates than Japan’sover the past 10 years. b. In trade negotiations with the Japanese over the large US trade deficit with Japan, the US administration has urged the Japanese government to undertake a more expansionary fiscal policy. Explain how this might affect the US trade deficit with Japan.this question has three questions . What proportion of this country’s total gross capital formation (or investment) can be financed from national savings, and what part must be financed from external resources? What are the various forms these external resources could take? show in graph how the current account got a deficit of 12% GDP and the budget deficit of 3%. Suppose a country has a large current account deficit (in the vicinity of 12% of GDP). It has a gross capital formation rate of 28% of GDP. The country has an overall budget deficit of 3% of GDP. The share of Household and NPISHs Final Consumption Expenditure is 68% of GDP and that of General Government Final Consumption Expenditure is 12%. What proportion of this country’s total gross capital formation (or investment) can be financed from national savings and what part must be financed from external resources? What are the various forms these external resources could take?I Graphical Analvsis NX is net exports andicate the impact of variables/curve through arrows. Analyze the impact of following situations graphically 1. Increase in budget deficit in 2. Increased business uncertainty closed economy: 3. Consumer and business confi- dence in open economy with an in closed economy: initial trade deficit: Investments curve = Investments curve = Savings curve = Savings curve = Investments curve = Savings curve = Interest rate = Interest rate = Interest rate = NX = NX = NX =
- Consider the following open economy SImodel set upY = 18000C = 300 + 0.8(Y − 2500)I = 3500 − 400(r)r = r∗ = 5G = 3000T = 2500NX = 5000 − 30(e)(a) Compute National Savings.(b) Compute Net Exports, NX and exchangerate, e.(d) Compute the impact on e, if both Gincrease by 500.19. In balance-of-payments accounting, the sale of a foreign production facility by a SA firm is a item in the SA balance of payments; the deposit of funds in a foreign bank account by a SA citizen item in the SA balance of payments. Debit; also is a debit Debit; is a credit Credit, is a debit Credit also is a credit 20. The table below shows a section of the national accounts for a small country in 2018. Answer the question that follows using the information provided in the table. Consumption expenditure Government expenditure 9 800 3 500 Depreciation 500 2 200 Exports Imports Gross capital formation (investment) Primary income payments Primary income receipts 1900 2 500 300 200 The value of Gross Domestic Product (GDP) is: A 16 100 B 19 900 16 600 15 600 A,The Foreign Exchange MarketThe Jamaican dollar experienced a rapid depreciation in the exchange rate during 2020 due to thepandemic's impact on key sectors. The exchange rate in 2020 closed at J$142.65 to US$1.00,after opening the year at J$132.57, resulting in a 7.6 per cent depreciation. As at FridaySeptember 16, 2022, the exchange rate was at approximately $ JA 150 to US $1 Arguments for and against fixed exchange rate.
