5. Graph the following and the effects of the following on national saving, investment, and the...

5. Graph the following and the effects of the following on national saving, investment, and the real interest rate. Explain your reasoning:

a. Millennials need avocado toast today and society become less future-oriented and thus decide to save less.

b. The government announces a large, one-time bonus payment to veterans returning from a war. The bonus will be financed by additional taxes levied on the general population over the next five years.

c. AOC’s green plan passes and the expected future marginal product of capital that rely of fossil fuels decreases. It also causes an decrease in expected future income

6. in a small open economy, desired national saving, S ^d = $10 billion + ($100 billion)r^w ; desired investment, I^d =$15 billion-($100 billion)r^w ; output, Y= $50 billion; government purchases, G = $10billion; world real interest rate, r^w =0.03

a. Find the economy’s national saving, investment, current account surplus, net exports, desire consumption, and adsorption.

b. Owing to a technological innovation that increases future productivity, the country’s desired investment rises by $2 billon at each level of the world real interest rate. Repeat part (a) with this new information

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Saving and investment in the national income accounts The following table contains data for a hypothetical...

Saving and investment in the national income accounts The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $1,680 million. Enter the amount for investment. National Income Account Value (Millions of dollars) Government Purchases (GG) 400 Taxes minus Transfer Payments (TT) 360 Consumption (CC) 1,000 Investment (II) Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from...

2. Saving and investment in the national income accounts The following table contains data for a...

2. Saving and investment in the national income accounts The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $1,175 million. Enter the amount for government purchases. National Income Account Value (Millions of dollars) Government Purchases (GG) Taxes minus Transfer Payments (TT) 225 Consumption (CC) 625 Investment (II) 300 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use...

2. Saving and investment in the national income accounts The following table contains data for a...

2. Saving and investment in the national income accounts The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $800 million. Enter the amount for government purchases. National Income Account Value (Millions of dollars) Government Purchases (G) 200 Taxes minus Transfer Payments (T) 260 Consumption (C) 300 Investment (I) 300 Complete the following table by using national income accounting identities to calculate national saving. In your calculations,...

How would each of the following affect national saving, investment, the current account balance, and the...

How would each of the following affect national saving, investment, the current account balance, and the real interest rate in a small open economy? An increase in the domestic willingness to save An increase in foreign government purchases

Based on the national saving and investment identity, explain how each of the following might react...

Based on the national saving and investment identity, explain how each of the following might react to greater government budget deficits. Be sure to consider all possibilities. a. Private saving b. Investment c. Savings by the rest of the world.

Based on the national saving and investment identity, explain how each of the following might react...

In the national income accounting identity showing the equality between national saving and investment, what is...

In the national income accounting identity showing the equality between national saving and investment, what is the representation of private saving and what is the representation of public saving?

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...

Write the equation for national saving for a small open economy. If national saving is held...

Write the equation for national saving for a small open economy. If national saving is held constant, what happens to domestic investment if NCO decreases? Why? Suppose the nominal exchange rate is 100 yen per dollar. Further, suppose the price of a baseball glove in Canada is $50 and the price of a baseball glove in Japan is 7500 yen. What is the real exchange rate between Japan and Canada in terms of baseball gloves? Is there a profit opportunity...

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)...

Subjects