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In Izodia, which has the same number of workers, each worker can produce 7 units of food or 1 unit of clothing daily. Why does the United States have an absolute advantage in both goods Which countr
You are working for George Soros and trying to figure out whether to invest $1B in the U.S. or in Turkey. The interest rate for similar assets is 7% in the US and 3% in Turkey. He needs your answer
Explain what would happen in the short run to US real interest rates and real GDP if the Fed takes action to counter the speculative capital outflow and support the US dollar. How would these events
The UK entered the European Exchange Rate Mechanism (ERM) in October 1990 at 2.95 Deutsche mark per pound and agreed to keep the pound within a range of ±6% against other member currencies of
The U.S. economy is in a recession and the IS-LM suggests we are in a liquidity trap. a) Illustrate the situation using the AD-AS and IS-LM diagrams. b) Explain what a liquidity trap.
Suppose that z' increases and that K increases at the same time. Show that it is possible for the real interest rate to remain constant as a result. What does this say about the model's ability
We are constantly hearing about the mass exodus of jobs to other countries (phone service, computer service, sales). Use the concept of comparative advantage to explain why this is occurring. Also,
why the general level of wages is higher in the United States and other industrially advanced countries. What is the single most important single factor underlying the long-run increase in average r
Supposed that, initially, the U.S. economy was in an aggregate demand-aggregate supply equilibrium at point A along the aggregate demand curve AD in the diagram in the next column. Now, however, the
The federal reserve arranges to make lonas to a banks automatically whenever an economic down-turn beginsB.) As the economy heats up, the resulting increase in equilibrium income immediately results
Terrorist attacks foster instability and may affect productivity over the short and long term. Do you think the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon affec
Give 3 reasons why the average person in Virginia is wealthier than the average person in Haiti. (Use the wealth equation) Give one advantage that people in Haiti have over people in Virginia. Why d
Suppose that the U.S. government collects a 35% tax on all corporate profit earned in the United States and that the Mexican government collects a 20% tax on all corporate profit earned in Mexico. A
Write a short essay evaluating the U.S. economy in terms of each of the six determinants of average labor productivity discussed in the text. Are there any areas in which the United States is except
Due to historical differences, countries often differ in how quickly a change in actual inflation is incorporated into a change in expected inflation. In a country such as Japan, which has had very
Despite the economic progress that the U.S. has observed in thepast century, the standard of living remains extremely low in manycountries. Consider the following regarding poverty indeveloping coun
The U.S. government imposes a price floor for U.S. sugar that isabove the market clearing price. Illustrate the U.S. sugarmarket with the price floor in place. Discuss the effects of the price floor
Over the past decade, some of Chinese saving has been used tofinance American investment. For example: Chinese havebeen buying American capital assets. a) If the Chinesedecided they no longer wanted
If Japan generally runs a significant trade surplus, do you thinkthis is most related to high foreign demand for Japanese goods, lowJapanese demand for foreign goods, a high Japanese saving raterela
the European Union (EU) is increasing its productivity very rapidly inall industries. He claims that this productivity advance is sorapid that output from the EU in these industries will soon exceed
Using a diagram of the US labor market, show theeffect of the capital inflow on the average wage paid to USworkers. the demand curve will shift to theright and the wages for US workers will increase d
A country has domestic investment of $100 billion. Its citizens purchase $500 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving
1. why a change in the real exchange rate changes a country's net exports. 2. why trade deficits tend to move to zero over time. 3. how foreign prices affect domestic prices. 4. the determination of t
What is the "current macroeconomic situation" in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.) What fiscal policies and monetary policies wou
When we purchase German products, does our demand for euro go up or down What are freely floating exchange rates all about, and how do they work How can the falling U.S. dollar impact your travel expe