Question

In: Economics

6. If domestic saving is less than domestic investment, then net exports are ______ and net...

6. If domestic saving is less than domestic investment, then net exports are ______ and net capital outflows are _____.

A. positive; positive

B. positive; negative

C. negative; negative

D. negative; positive

7. In a small, open economy, if domestic saving exceeds domestic investment, then the extra saving will be used to

A. make loans to the domestic government

B. make loans to foreigners

C. repay the national debt

D. repay loans to the federal reserve

8. A trade deficit can be financed in all the following ways except by

A. borrowing from foreigners

B. selling domestic assets to foreigners

C. selling foreign assets owned by domestic residents to foreigners

D. borrowing from domestic lenders

9. In a small, open economy, if the world real interest rate is above the rate at which national saving equals domestic investment, then there will be a trade ______ and ______ net capital outflow.

A. surplus; negative

B. deficit; positive

C. surplus; positive

D. deficit; negative

10. In a small, open economy, starting from a position of balanced trade, if the government increases domestic purchases, this produces a tendency toward a trade _____ and _____ net capital outflow.

A. deficit; negative

B. surplus; positive

C. deficit; positive

D. surplus; negative

Solutions

Expert Solution

Answer 6.c. negative, negative

Reason- domestic investment is more than savings, it means inward flow of capital. So net export and capital outward is negative.

Answer 7. B make loans to foreigners

Reason- when domestic savings is more than domestic inveatment, capital flows outward. So extra monet is used to make loans to foreigners.

Answer 8. D. borrowing from domestic lenders.

Reason- trade Deficit means their is not enough domestic savings to there can be no borrowing from domestic lenders.

Answer 9. C. Surplus, positive

Reason- When world interest rate is greater than domestic interest rate, there will be net capital outflow. Trade surplus as export will be more than imports.

Answer 10. A. Deficit, negative

Reason- increase in domestic purchase leads to trade deficit and negative net capital outflow.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

If saving is less than domestic investment, then a. there is a trade deficit and Y...

If saving is less than domestic investment, then a. there is a trade deficit and Y > C + I + G. b. there is a trade deficit and Y < C + I + G. c. there is a trade surplus and Y > C + I + G. d. there is a trade surplus and Y < C + I + G Question 49 In the short run, an increase in the money supply causes interest rates to...

For an economy, if its national saving is greater than its domestic investment, then which of...

For an economy, if its national saving is greater than its domestic investment, then which of the following is true? A) this economy must have a current account surplus. B) this economy must have a financial account surplus. C) this economy’s government budget must be in surplus. D) all of the above If an economy’s current account is in deficit, then it is true that __________. A) its national saving finances the purchase of domestic goods by foreign countries B)...

Explain the relationship among output, saving, and investment. Suppose depreciation per worker is less than saving...

Explain the relationship among output, saving, and investment. Suppose depreciation per worker is less than saving per worker. Given this situation, explain what will happen to each of the following variables over time: capital per worker, output per worker, saving per worker, and consumption per worker. During the latter half of the 1990s, the U.S. saving rate decreased. Will this reduction in the saving rate have a permanent effect on the rate of growth of output per worker? Explain. Graphically...

(a) define net exports and net foreign investment (b) explain how and why net exports and...

(a) define net exports and net foreign investment (b) explain how and why net exports and net foreign investment are related (c) Suppose that real interest rates decrease in the rest of the world,but not in Hong Kong. Explain how this would be likely to affect net foreign investment in Hong Kong?

1. If there are no transfers or net? investment, it must be true that net exports...

1. If there are no transfers or net? investment, it must be true that net exports are ( greater than / equal to / less than / not related to ) net foreign investment 2. In an open? economy, an expansionary fiscal policy on the part of the government of Japan will? cause: A. an increase in interest rates in Japan which may have a larger crowding out effect than in a closed economy. B. an increase in interest rates...

The saving rate (gross domestic saving as a % of GDP) in Singapore, a small open economy, was 48% in 2017 while the investment rate (domestic investment as a % of GDP) was 25%.

Explain whether the given statement is true, false or uncertain. Start your answer by selecting one of the options – “True”, “False” or “Uncertain” and then provide arguments to justify your selection (be brief and concise and present your arguments in 100 or less words). You need to ensure your assumptions are clear, reasonable and explicit if making any.Question:The saving rate (gross domestic saving as a % of GDP) in Singapore, a small open economy, was 48% in 2017 while...

In Mankiw’s model of a small open economy, domestic interest rates are set by the world’s market for loanable funds, rather than by domestic saving and investment.

In Mankiw’s model of a small open economy, domestic interest rates are set by the world’s market for loanable funds, rather than by domestic saving and investment.a. What are the two simplifying assumptions in the model that disconnect domestic interest rates from domestic saving and investment? b. What is determined by domestic saving and investment in the model?

Which of the following equations is true in an open economy? a. Domestic saving = net...

Which of the following equations is true in an open economy? a. Domestic saving = net capital flows. b. Net exports = -Financial account balance. c. Private saving = net foreign investment + domestic investment. d. Net exports = net foreign investment.

5. Saving and net flows of capital and goods In a closed economy, saving and investment...

5. Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful...

Use the information in the table below to calculate Net Exports (NX) and gross domestic product...

Use the information in the table below to calculate Net Exports (NX) and gross domestic product (GDP), in billions of dollars. Consumption Spending. . . . . .. . . . . . . . . . $12,000 billion Gross Investment Spending . . . . . . . . . . . . $3,100 billion Government Purchases. . . . . . . . . . . . . . . $3,400 billion Exports . . . . . . . . . ....

Subjects