Question
In: Economics
1) Consider a small country whose actions does not affect the world interest rate. Draw a...
1) Consider a small country whose actions does not affect the world interest rate. Draw a loanable funds market for the country and analyze how Net Export and Net Capital Outflow changes when the following happens. Draw different graphs for each case.
a) The country’s government implements a policy to lower income taxes while keeping the government budget unaffected
b) The US (a powerhouse in the World market) implements a contractionary monetary policy to raise interest rate
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
1. How does collateral affect the interest rate on a bond? How does subordination affect the...
1. How does collateral affect the interest rate on a bond? How
does subordination affect the interest rate on a bond too? What
else might affect the interest rate on a bond?
2. What is liquidation and reorganization? When should each be
used? Please choose one company that has gone through either type
of bankruptcy proceeding and describe the circumstances leading up
to the filing.
1. How does collateral affect the interest rate on a bond? How does subordination affect the...
1. How does collateral affect the interest rate on a bond? How
does subordination affect the interest rate on a bond too? What
else might affect the interest rate on a bond?
4. Suppose that in a small country interest income is taxed at rate 20%. Consider two...
4. Suppose that in a small country interest income is taxed at
rate 20%. Consider two citizens:
• a low-income one with annual income of $40,000,
• a high-income citizen with annual income of $100,000,
each of them saves 10% of his or her income for retirement. The
government is proposing to allow citizens to put money into an
individual retirement account, where the contributions would be tax
deductible and interest would accumulate tax free. Withdrawals
would be taxed as...
Acirema is a small country, unable to affect world prices. It imports sugar at a price...
Acirema is a small
country, unable to affect world prices. It imports sugar at a price
of $10 per bag. The demand curve in Japan is D=1000 - 25P and the
supply curve is S=100 + 5P. Using a graphical analysis please
answer the following questions:
a) Calculate the
quantity supplied, quantity demanded, and equilibrium imports when
free trade prevails.
b) Suppose an import
quota limits imports to 300 bags of sugar. Calculate the production
distortion loss, the consumption distortion...
Consider savings and investment in a small, open economy model. Suppose the exogenous world interest rate...
Consider savings and investment in a small, open economy model.
Suppose the exogenous world interest rate determines the
investment.
a) Draw the demand and the supply of loanable funds. What
determines the net exports, NX (or net capital outflow) in this
open economy?
b) Show the impact of a fiscal policy change at home (an
increase in G or a decrease in taxes) on savings, investment and
net export (NX) with the help of a graph in this model.
c)...
How does the interest rate affect international trading and investment.
How does the interest rate affect international trading and
investment.
explain thefollowing in 400 words: 1. How does collateral affect the interest rate on a bond?...
explain thefollowing in 400 words:
1. How does collateral affect the interest rate on a bond? How
does subordination affect the interest rate on a bond too? What
else might affect the interest rate on a bond?
2. What is liquidation and reorganization? When should each be
used? Please choose one company that has gone through either type
of bankruptcy proceeding and describe the circumstances leading up
to the filing.
Distinguish between the nominal rate and the real rate of interest. How does inflation affect the...
Distinguish between the nominal rate and the real rate of
interest. How does inflation affect the real, ex post (after the
fact) rate of return to investors?
Consider a small island country whose only industry is fishing. The following table shows information about...
Consider a small island country whose only industry is fishing.
The following table shows information about the small economy in
two different years.
Complete the table by calculating physical capital per worker as
well as labor productivity.
Hint: Recall that productivity is defined as the amount of goods
and services a worker can produce per hour. In this problem,
measure productivity as the quantity of goods per hour of
labor.
Year
Physical Capital
Labor Force
Physical Capital per Worker
Labor...
If the world interest rate falls, then, holding other factors constant, in a small open economy...
If the world interest rate falls, then, holding other factors
constant, in a small open economy the amount of domestic investment
will _________ and net exports will ______________
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