Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 16.5, Problem 1QQ
To determine
Increase in resource availability.
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Exercise 2
Consider a small open economy.
Assume that GDP (Y) is 5000. Consumption (C) is given by the equation C = 1000 + 0.25(Y-T). Investment (1)
is given by the equation I = 1500 – 50r, where r is the real interest rate in percentage points. The world
interest rate is actually 5% (r*-5). Taxes (T) are 1000 and government spending (G) is 1500. Net exports are
given by the equation NX=500-250E.
1. Compute the equilibrium real exchange rate. Is the Purchasing Power Parity assumption respected?
Suppose that prices in the home currency are ten times smaller than prices in the dominant foreing
currency. Which is the nominal exchange rate?
2. Is the government budget in surplus or deficit? For each of the possible policy tools to achieve a
balanced budget, compute the equilibrium exchange rate and represent it graphically. Interpret
your results.
3. Suppose T and G at their initial values (1000 and 1500). Suppose there is a shift in the global supply
of funds, so that the new world…
Argentina has net capital outflow of $2,000, government purchases of $10,000 and consumption of $40,000. Which of the
following is correct?
If its domestic investment is $2,000, its GDP is $52,000.
If its domestic investment is $4,000, its GDP is $56,000.
If its domestic investment is $10,000, its GDP is $58,000.
None of the above are correct.
b.
d.
A
B
D
b
Suppose Country A has a NNP of $480 billion. Income receipts from the rest of the world are $26 billion, income payments to the rest of the world are $10 billion, and depreciation is $45 billion. What is the dollar value of consumption expenditure if it accounts for 68% of GDP? Throughout your calculations, round to one decimal place if necessary.
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure
Chapter 16 Solutions
Macroeconomics
Ch. 16.1 - Prob. 1QQCh. 16.1 - Prob. 2QQCh. 16.1 - Prob. 3QQCh. 16.1 - Prob. 4QQCh. 16.4 - Prob. 1QQCh. 16.4 - Prob. 2QQCh. 16.4 - Prob. 3QQCh. 16.4 - Prob. 4QQCh. 16.5 - Prob. 1QQCh. 16.5 - Prob. 2QQ
Ch. 16.5 - Prob. 3QQCh. 16.5 - Prob. 4QQCh. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - Prob. 3DQCh. 16 - Prob. 4DQCh. 16 - Prob. 5DQCh. 16 - Prob. 6DQCh. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7P
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