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?
(a) Saving curve shifts left, so S falls, I is unchanged, CA falls.
(b) Investment curve shifts left, so S is unchanged, I falls, CA rises.
(c) Saving curve shifts right, so S rises, I is unchanged, CA rises.
(d) Investment curve shifts right, so S is unchanged, I rises, CA falls.
You might also like to view...
[NeedAttention]
Exhibit 30-5
?
If only one firm operates in a market, and a potential entrant is blockaded from entering the market, then the incumbent firm must
A) have acted to prevent entry. B) be pricing where price equals marginal cost. C) be a natural monopoly. D) be the Stackelberg leader.
A price ceiling might be an appropriate government response to a
a. period of falling farm prices due to unusually good harvests b. substantial increase in farm productivity due to marked applications of new technology in agriculture c. national security crisis leading to major shortages of essential goods d. period of extraordinary large surpluses of farm goods e. good in which the demand is considerably less than the supply
Answer the following questions:
a. What is the difference between gross domestic product and gross national product? b. Give an example of a transaction that would be counted in GDP but not in GNP. c. Give an example of a transaction that would be counted in GNP but not GDP.