Explain how the "euro crisis" could potentially affect the following:
1.Exports from the United States
2. Supply chains of U.S. manufacturers.
3. U.S. banks
1. U.S exports could suffer as European consumers reduce spending. Although foreign trade is a relatively small part of U.S. gross domestic product, and only a small share of this trade is with Europe, U.S. exports have accounted for over 40% of the growth of GDP since the end of the recession in 2009.
2. Some U.S. manufacturers rely on European companies for components in their manufacturing, and a slowdown of European economies could reduce the amount of available components these firms use in the manufacturing of their products.
3. At the end of 2011, U.S. banks held over $650 billion worth of euro-zone debt, and if the euro crisis resulted in a decline in the value of the euro relative to the dollar, the value of this debt would be reduced.
You might also like to view...
Entry by new firms into a perfectly competitive industry
A. has no effect on existing firms. B. results in higher output by existing firms in equilibrium. C. results in lower output by existing firms in equilibrium. D. results in no change in the market price or output.
If the interest rate increases due to an increase in government purchases, the rise in real GDP will be greater than what would have occurred if the interest rate had remained stable
a. True b. False
If the quantity of Good Y is measured on the vertical axis, the quantity of Good X is measured on horizontal axis, the price of Good X is $50, the price of Good Y is $20, and the budget is $500, the vertical intercept of the budget line is
A. 25, the horizontal intercept is 10, and the slope is -0.4. B. 20, the horizontal intercept is 50, and the slope is -0.4. C. 10, the horizontal intercept is 25, and the slope is -2.5. D. 50, the horizontal intercept is 20, and the slope is -2.5.
If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. neither the short-run nor long-run aggregate supply curves would be affected. B. only the long-run aggregate supply curve would shift left. C. only the short-run aggregate supply curve would shift left. D. the long-run and short-run aggregate supply curves would both shift left.