1. A country has $20 million of domestic investment and net capital outflow of $10 million....

1. A country has $20 million of domestic investment and net capital outflow of $10 million. What is saving? show work

2. If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos, then the forecast is given in nominal terms and implies the dollar will _____appreciate____________(Appreciate/Depreciate).

3. A U.S. purchase of oil from overseas paid for with foreign currency it already owned _________(increases/decreases) U.S. net exports, and ______________(increases/decreases) U.S. net capital outflow

Solutions

Expert Solution

1. Ans

Savings = Investment(I)+Net Capital Outflow(NCO)

Savings = 20+10

Savings = $30 million

2. Ans

If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos, then the forecast is given in nominal terms and implies the dollar will appreciate.

3. Ans

A US purchase of oil from overseas paid for with foreign currency it already owned decreases US net exports, and decreases US net capital outflow.

Rahul Sunny answered 1 year ago

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