Exam 5: Saving and Investment in the Open Economy

A friend claims that Canada is a net international debtor.The best way of testing this claim is to

Explain how a temporary increase in oil price affects the national saving,investment,and current account of an oil-importing country.

The merchandise trade balance is a country's

Suppose GDP is $20 billion and the desired absorption is $16 billion.What are the net exports?

The official settlements balance equals

Which of the following statements about the Canadian balance of payment is true?

Suppose desired consumption is $10 billion and desired investment is $3 billion.If GDP is $25 billion and government purchases are $2 billion,the desired national saving is

Which of the following would be part of the nation's capital account?

When a current account has a surplus of $5 billion,it means that

If a Canadian firm buys stereos from a Japanese firm and the Japanese firm uses the dollars it gets to buy Canadian Treasury bonds,what items are recorded in the Canadian balance of payments accounts?

A large open economy increases its desired saving.This causes the world real interest rate to ________ and the country's current account balance to ________.

The term "twin deficits" refers to a situation in which there exists

A small open economy increases its desired saving.This causes the world real interest rate to ________ and the country's current account balance to ________.

A small open economy increases its investment demand.This causes the world real interest rate to ________ and the country's current account balance to ________.

In a large open economy like the United States,an increased government budget deficit that reduces national saving

In a small open economy Sᵈ = $20 billion + ($100 billion)r% Iᵈ = $30 billion - ($100 billion)r% Y = $70 billion G = $20 billion rʷ = .04. a.Calculate the current account balance. b.Calculate net exports. c.Calculate desired consumption. d.Calculate absorption.

If the Bank of Canada buys $3 billion worth of Japanese yen,$4 billion of German marks,and $2 billion of French francs,and sells $5 billion of British pounds,how does this affect the official settlements balance?

If business taxes rise in a large open economy,it causes the current account to ________ and saving to ________.

Consider an economy with GDP of $100 billion,desired investment of $20 billion,desired consumption of $50 billion,and government purchases of $2 billion.Calculate the following: a.Desired absorption b.Desired national saving c.Desired foreign lending

The main difference between the small open economy and the large open economy is that