ECON 1BB3 Chapter Notes - Chapter 5: Progressive Alliance Of Socialists And Democrats, Autarky, Demand Curve

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limedonkey197

22 Jun 2016

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

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ECON 1BB3 Full Course Notes

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Chapter 13: a macro economic theory of the small open economy. To understand the forces at work in an open economy we focus on supply and demand in two markets: the market for loanable funds (net capital outflow) and the market for foreign currency exchange. All savers go to this market to deposit their savings and all borrowers go to this market to get their loans. Exist b/c people want to trade goods and services and financial assets w/t people in other countries, but they want to be paid for these things in their own currency. For a canadian to purchase a good, service, or financial asset from someone in another country the canadian must purchase the other country"s currency as well. Real exchange rate is the relative price of domestic and foreign goods and therefore is a key determinant of net exports.

Related Questions

5. Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis. Recall the components that make up GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C = consumption, I = investment, G = government purchases, X = exports, M = imports, and NX = net exports: Y = Also, national saving is the income of the nation that is left after paying for . Therefore, national saving (S) is defined as: S = Rearranging the previous equation and solving for Y yields Y = . Plugging this into the original equation showing the various components of GDP results in the following relationship: S = This is equivalent to S = , since net exports must equal net capital outflow (NCO, also known as net foreign investment). Now suppose that a country is experiencing balanced trade. Determine the relationships between the entries in the following table, and enter these relationships using the following symbols: > (greater than), < (less than), or = (equal to). Outcomes of Balanced Trade Imports Exports 0 Net Exports Y C+I+G Investment Saving Net Capital Outflow 0

ochreduck773

I sent this post in earlier but got the wrong response, I need a essay on the topic answering the following points with a conclusion. This is the topic : Money and the prices in the long run and open economies

Here are the points or bullets:
(1) analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years.
(2)discuss how government policies can influence economic growth.
(3)analyze how monetary policy could influence the long run behavior of price levels, inflation rates, costs, and other real or nominal variables.
(4)described how trade deficits or surpluses can influence the growth of productivity and GDP.
(5)discuss the importance of the market for loanable funds and the market for foreign currency exchange to the achievement of the strategic plan.
(6)recommend, based on your above findings, whether the strategic plan can be achieved and provide support.

I need an introductory to the topic also.

plumdonkey692

Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the student's investment projects:

Student	Return
Student	(Percent)
Yakov	4
Charles	7
Dina	15

Assume borrowing and lending are prohibited, so each student uses only personal savings to finance his or her own investment project.

Complete the following table with how much each student will have a year later when the project pays its return.

Student	Money a Year Later
Student	(Dollars)
Yakov	_________
Charles	_________
Dina	_________

Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate or.

If a studentâs expected rate of return is greater than r, he or she would choose to (lend, borrow).

Suppose the interest rate is 6 percent.

Among these three students, the quantity of loanable funds supplied would be $______, and quantity demanded would be $______.

Now suppose the interest rate is 12 percent.

Among these three students, the quantity of loanable funds supplied would be $______, and quantity demanded would be $______.

At an interest rate of ______%, the loanable funds market among these three students would be in equilibrium. At this interest rate, (Charles, Yakov, Yakov and Charles, Charles and Dina, Dina) would want to borrow, and (Charles, Yakov, Yakov and Charles, Charles and Dina, Dina) want to lend.

Suppose the interest rate is at the equilibrium rate.

Complete the following table with how much each student will have a year later after the investment projects pay their return and loans have been repaid.

Student	Money a Year Later
Student	(Dollars)
Yakov	_________
Charles	_________
Dina	_________

True or False: Only borrowers are made better off, and lenders are made worse off.

cyansheep662

ECON 1BB3 Chapter Notes - Chapter 5: Progressive Alliance Of Socialists And Democrats, Autarky, Demand Curve

ECON 1BB3 Full Course Notes

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