- Assume that an expansionary monetary policy leads to a decline or depreciation of the U.S. dollar relative to the currencies of America’s trading partners in the short run with unemployed resources.
- Explain the mechanism by which this will produce an economic expansion in the United States. Explain how the trade impact reinforces the impact on domestic investment. What would the expenditure multiplier be in an economy without government spending or taxes where the MPC is 0.8 and the MPm is 0? Where the MPm is 0.1? Where the MPm is 0.9? Explain why the multiplier might even be less than 1.
- Would each of the following groups be happy or unhappy if the U.S. dollar appreciated? Explain :(a) Dutch pension funds holding U.S. government bonds, (b) U.S. manufacturing industries, (c) Australian tourists planning a trip to the United States, (d) An American firm trying to purchase property overseas.
- Assume that American rice sells for $100 per bushel. Japanese rice sells for 16,000 yen per bushel, and the nominal exchange rate is 80 yen per dollar. (a) Explain how you could make a profit from this situation. What would be your profit per bushel of rice? If other people exploit the same opportunity, what would happen to the price of rice in Japan and the price of rice in the United States? (b) Suppose that rice is the only commodity in the world. What would happen to the real exchange rate between the United States and Japan?
- Suppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and with a diagram. a.What happens to the demand for dollars in the market for foreign-currency exchange? b.What happens to the value of dollars in the market for foreign-currency exchange? c.What happens to the quantity of net exports?
- A senator renounces her past support for protectionism: “The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If we subsidize U.S. exports instead, we can reduce the deficit by increasing our competitiveness.” Using a three-panel diagram, show the effect of an export subsidy on net exports and the real exchange rate. Do you agree with the senator?
- Define carefully the difference between movements along the AD curve and shifts of the AD curve. Explain why an increase in potential output would shift out the AS curve and lead to a movement along the AD curve. Explain why a tax cut would shift the AD curve outward (increase aggregate demand).
- Illustrate the effects of the following developments on both the short-run and long-run Phillips curves. Give the economic reasoning underlying your answers. (a) A rise in the natural rate of unemployment (b) A decline in the price of imported oil (c) A rise in government spending (d) A decline in expected inflation.
- “If the government strengthens intellectual property rights, subsidizes basic science, and controls business cycles, we will see economic growth that would astound the classical economists.” Explain what the writer meant by this statement.
- Suppose that society decided to reduce consumption and increase investment. (a) How would this change affect economic growth (b) What groups in society would benefit from this change? What groups might be hurt?
Minggu, Januari 01, 2017
Soal Kuis PTE Makro
Human Population Through Time