Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Economics Questions
1. What is meant by “twin deficits”? Use this relationship between GNE and GNDI to explain your answer
Twin deficits take into account a circumstance where an economy is facing both a fiscal deficit as well as a deficit on the current account for the nation’s balance of payments. Therefore, the nation is facing both trade deficits and government budget deficits. This can elucidate the relationship between national income (GNDI) and the national expense (GNE). Notably,
GNDI = GNE + CA (current account)
GNDI > GNE if and only if CA > 0 and this is indicative of a surplus in the current account
GNDI < GNE if and only if CA < 0 and this is indicative of a deficit in the current account
2. Give an intuitive explanation that captures the relationship between the current account position (surplus or deficit) and role of the country as a net borrower or lender. How may this relationship generate wealth effects altering the later Current Account?
A surplus in the current account is a positive variance between the savings and investment of a nation. Such a surplus is indicative of a country being a net lender to the entire world. On the other hand, a deficit in the current account is a negative variance between the savings...
Such a deficit is indicative of a nation being a net borrower. This relationship generates wealth effect altering the later current account because it causes a negative or positive balance. Notably, developed nations such as the U.S run a positive or surplus current account whereas developing nations run a negative or deficit current account (Investopedia, n.d.).
3. What role do exchange rates play in the net external wealth of a country? Illustrate by explaining what an exchange rate appreciation can do to a country holding an asset denominated in foreign currency
Exchange rates play a significant role in the net external wealth of a nation owing to their relationship with net capital flows and net capital gains. Exchange rate is fundamental to economic management and price stability in a nation. Attractive exchange rates give rise to greater foreign investor flows, which increase the wealth of a country. Notably, an exchange rate appreciation gives rise to an increase in net investment capital flows. In global trade, currency appreciation causes a nation’s exports to become more costly for the citizens of other nations if exporters in that nation can escalate the prices at which they retail their goods to foreign consumers. In particular, if the exporters lack the capacity to…
References
Caprio, G. (Ed.). (2012). The evidence and impact of financial globalization. Academic Press.
Cline, W. R. (2010). Financial globalization, economic growth, and the crisis of 2007-2009. Peterson Institute.
Investopedia. (n.d.). Current Account. Retrieved from: https://www.investopedia.com/terms/c/currentaccount.asp
Investopedia. (n.d.). J-Curve Effect. Retrieved from: https://www.investopedia.com/terms/j/j-curve-effect.asp
Yeyati, E. L., & Williams, T. (2014). Financial globalization in emerging economies: Much ado about nothing?. economía, 14(2), 91-131.
This is a pattern that is relatively consistent over a long time period (Clayton & Spletzer, 2006). The only difference in 2005 was that unemployment claims did not rise in the fourth quarter with the drop in jobs, as they had done in the past. It is difficult to draw definitive conclusions as to where these employees went in the fourth quarter of 2005. To do so would be filled
For the first time in many years, nations like Japan can no longer guarantee employment for their large population and they must consider a new welfare option. These are all economic situations that are new and indicate that population has an adverse affect on the world economic policies. Conclusion This report aimed to discuss some of the relationships between population growth and economic development. Economic growth will continue to be an
economic and quantitative analysis topics, roughly six in total. Those topics, in order, are focus on a non-core variable (and model) for the country of Nigeria, analysis of the World Bank World Development Indicators (WDI) model, comments on regression and the validity questions rising from within, the general problems and issues with regression analysis in general, whether any of the variable in the author's personal model have problems related
Economic Development of China and Korea China and Korea, not exactly highly developed countries, but carry a mystique about them that intrigues everyone in the United States. Two countries, on the verge of emerging into their full economic potential, is at the present time, attracting plenty of media attention. Was their economic bankruptcy influenced by the attack on America? The purpose of this essay is to discuss and compare the differences
Economic Globalization Has the 2008 financial meltdown in the U.S. And the ongoing economic crisis in Europe have practically ended the era of economic globalization? Following the financial crisis that marred the U.S. economy along with other global economies as well as the ongoing Eurozone debt crisis, there have been projected concerns that this predicament would end economic globalization. The purpose of this paper is to assess this claim. Going by Immanuel
Economics Scenario In the first phase, the price of coffee increased and thus lured producers into the market. This caused the supply to move up the curve. The increased supply caused the demand to decrease and thus caused the overproduction. The mechanism is shown below graphically. The graph shows the coffee market at an equilibrium price of 3.25. The increase in price caused the supply to rise and the demand to fall. This