Refer to the table below. The balance of trade in goods and services was:
The following table contains hypothetical data for the U.S. balance of payments in a year. Answer the following question on the basis of these data. All figures are in billions of dollars.
U.S. goods exports +$390
U.S. goods imports -498
U.S. service exports +133
U.S. service imports -107
Net investment income +12
Net transfers -22
Capital account -5
Foreign purchases of U.S. assets +156
U.S. purchases of foreign assets -59
A. $107 billion surplus
B. $82 billion deficit
C. $115 billion deficit
D. $55 billion surplus
B. $82 billion deficit
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Draw the demand for and supply of the U.S. dollar in each of the following cases. Diagram and explain in words the effect of each of the following events in the short run. Make sure to properly label the axes
In each case, assume the two countries under consideration are important trading partners. (a) There is an increase in the real interest rates in the United States relative to Japan. (b) Investment returns in the United States decrease relative to expected returns in Japan. (c) Inflation in Japan fell relative to the inflation rate in the United States. (d) The Japanese expect the value of the U.S. dollar to decline. (e) The Federal Reserve raised interest rates fearing the inflationary pressures of a booming U.S. economy.
In mid-2004 there was speculation that the Federal Reserve would be raising interest rates before the end of the year. How would this news affect the bond market and why?
What will be an ideal response?
Aimee sells hand-embroidered dog apparel over the Internet. Her annual revenue is $128,000 per year, the explicit costs of her business are $42,000, and the opportunity costs of her business are $30,000. What are the implicit costs of her business?
A) $12,000 B) $30,000 C) $72,000 D) $86,000
Strategic trade policy requires ALL of the following EXCEPT
A) subsidies set before output levels. B) non-retaliation of the trading partner. C) credible actions on the part of the subsidizing government. D) incomplete information on the part of the government.