Exam 5: Saving and Investment in the Open Economy

Suppose output is $35 billion,government purchases are $10 billion,desired consumption is $15 billion,and net exports are $4 billion.Then desired investment equals

The official settlements balance equals

When there are two large open economies,the world real interest rate will be such that

Suppose the current account shows debits of $5.3 billion and credits of $4.7 billion.The current account balance is ________,and the capital and financial account balance is ________.

A large open economy has desired national saving of S^d = 20 + 200r^w,and desired national investment of I^d = 30 - 200r^w.The foreign economy has desired national saving of = 40 + 100r^w,and desired national investment of = 75 - 400r^w. (a)Calculate the equilibrium values of r^w,CA,CA_For,S,I,S_For,and I_For. (b)Suppose S^d rises by 45,so that now S^d = 65 + 200r^w.Calculate the equilibrium values of r^w,CA,CA_For,S,I,S_For,and I_For. (c)Suppose,with S^d back to S^d = 20 + 200r^w,as in part (a),that I^d rises by 45,to I^d = 75 - 200r^w.Calculate the equilibrium values of r^w,CA,CA_For,S,I,S_For,and I_For.

Assuming no change in the effective tax rate on capital,a decrease in the government budget deficit will reduce the current account deficit if and only if the decrease in the budget deficit

If a U.S.company imports 10 Toyotas from Japan at $15,000 each,and the Japanese company buys airline tickets on a U.S.airline with the money,how does this affect the U.S.balance of payments accounts?

Suppose output is $35 billion,government purchases are $10 billion,consumption is $15 billion,and net exports are $4 billion.Assume net factor payments equal 0. (a)Calculate the equilibrium amount of investment.Show your work. (b)Calculate the equilibrium amount of absorption.Show your work. (c)Calculate the equilibrium amount of the capital and financial account balance.Show your work.

A large open economy has desired national saving of S^d = 1200 + 1000r^w,and desired national investment of I^d = 1000 - 500r^w.The foreign economy has desired national saving of = 1300 + 1000r^w,and desired national investment of = 1800 - 500r^w.In equilibrium,the foreign country has net exports equal to

Consider a small open economy in equilibrium with a zero current account balance.What happens to national saving,investment,and the current account balance in equilibrium if (a)future income rises? (b)business taxes rise? (c)government expenditures decline temporarily? (d)the future marginal product of capital rises?

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

Suppose output is $1000 billion,government purchases are $200 billion,desired consumption is $700 billion,and desired investment is $150 billion.Net foreign lending would be equal to

Suppose the development of the European Union leads to greater investment in Europe.You'd expect

A large open economy's real interest rate will decrease if

A negative value for the U.S.official reserve assets line in the balance of payments accounts means that

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

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

If there is an increase in the future marginal product of capital in a small open economy,it causes the current account to ________ and saving to ________.

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

When a temporary adverse supply shock hits a large open economy,it causes the current account to ________ and investment to ________.