Consider a small open economy in equilibrium with a current account deficit
(a) Draw a diagram showing this situation.
(b) What happens to national saving, investment, and the current account balance in equilibrium if government expenditures rise temporarily? Show this result in your diagram.
The diagram must have an initial equilibrium with the quantity of investment exceeding the quantity of national saving, so that the current account balance is negative. The temporary rise in government expenditures causes the desired national saving curve to shift to the left. In equilibrium, national saving declines, investment is unchanged (because the world real interest rate is unchanged), and the current account balance declines.
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Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16.The benefit to Matt of driving to campus to buy the concert ticket last week was:
A. $9 B. $16 C. $2 D. $4
If the MPC is 0.75, the expenditure multiplier will be
A. 3.5. B. 4. C. 2. D. 3.
Poorly defined property rights imply that _____
a. people can play their music as loud as they would like b. profit opportunities exist for entrepreneurs c. a Pareto optimum is still easily achieved d. people may be able to use resources without paying for them
The observed variations in practice patterns in different regions of the country are difficult to eliminate
a. because of the many alternative treatment options available for most ailments. b. due to the localized nature of most medical practice. c. because it is difficult to change the preferences of physicians and patients. d. the observed variations are so minor that they are of little concern to policy makers. e. responses a, b, and c are all true.