ECON 1BB3 Lecture Notes - Lecture 12: Cameco, Foreign Direct Investment, Mutual Fund

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jadekangaroo683

27 Apr 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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Domestically produced goods that are sold abroad. Foreign produced goods that are sold domestically. Value of exports value of imports. Indicates whether a country is a seller or buyer in world markets: flow of goods and services across national borders. When exports are greater than imports: a positive net export, country sells more goods abroad than they buy. When imports are greater than exports: a negative net export, country buys more goods abroad then they sell. When exports and imports are equal: a zero net export, country buys as much goods abroad as they sell. Consumer taste: for domestic and foreign goods. Prices of goods: at home and abroad. Real exchange rates: use of domestic currency to buy foreign currencies. Consumer income: domestic income rises imports go up, net exports go down, foreign income rises exports go up, net exports go down. Cost of transporting goods: from country to country.

Related Questions

An economy with zero net exports is described below:

C	= 100 + 0.6 (Y 'T)
I ^p	= 70
G	= 120
NX	= 0
T	= 150
The multiplier in this economy is 2.5.

A. Find short-run equilibrium output.

Instruction: Enter your response as an integer value.

Short-run equilibrium output: .

B. Economic recovery abroad increases the demand for the country's exports; as a result, NX rises to 80.

Instruction: Enter your response as an integer value.

Short-run equilibrium output (Click to select)decreases/ increases to ________ .

C. Assume that foreign economies are slowing, reducing the demand for the country's exports so that NX = -80. (A negative value of net exports means that exports are less than imports.)

Instruction: Enter your response as an integer value.

Short-run equilibrium output (Click to select)increases/decreases to ___________ .

D. Which of the following best describes the tendency of recessions and expansions to spread across countries?

1. Lower planned aggregate spending in one nation will reduce the amount of goods it exports abroad, thereby lowering the value of imports for its trading partners, which will reduce its short-term equilibrium output as well.

2. Lower planned aggregate spending abroad means that fewer goods will be exported from a specific nation, leaving more goods available for domestic consumption (C) in that nation, which will increase its short-term equilibrium output.

3. Lower planned aggregate spending abroad will reduce the amount of investment that flows into domestic industries from other countries, thereby reducing domestic short-term equilibrium output.

4. Lower planned aggregate spending in a nation means fewer imports of foreign goods, thereby reducing the short-term equilibrium output of its trading partners through lower net export (NX) values in those nations.

bronzehyena108

Since the United States has negative net foreignâ investment, its

A. net capital flow must be negative.

B. domestic saving must be less than its domestic investment.

C. exports must be greater than its imports.

D. domestic investment must be less than its domestic saving.

Expansionary fiscal policy is less effective in an open economy because

A. increases in the money supply will reduce interest rates and lower the value of theâ dollar, reducing aggregate demand.

B. increases in government spending can increase interestâ rates, which increases the value of the dollar and crowds out net exports.

C. increases in government spending will be partly spent on importedâ goods, which do not benefit the domestic economy.

D. increases in taxes reduceâ consumption, which in turn reduces consumption of imports and increases net exports.

When the Federal reserve uses contractionary monetary policy to reduceâ inflation, it

A. sells treasury securities increasing interestâ rates, leading to a stronger dollar that lowers net exports in an open economy.

B. buys treasury securities decreasing interestâ rates, leading to a weaker dollar that lowers consumption of durables in a closed economy.

C. sells treasury securities decreasing interestâ rates, leading to a stronger dollar that lowers domestic investment in a closed economy.

D. buys treasury securities increasing interestâ rates, leading to a weaker dollar that increases net exports in an open economy.

If a country saves more than it investsâ domestically, then its net foreign investment must be (positive, negative, or zero)?

International trade is advantageous because trade makes it possible for people in each country to:

A) import and export

B) export more than they import

C) employ more of their domestic resources producing things that are costly for them to produce domestically

D) acquire goods from foreigners more economically than they could be produced domestically

E) do all of the above

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ECON 1BB3 Lecture Notes - Lecture 12: Cameco, Foreign Direct Investment, Mutual Fund

ECON 1BB3 Full Course Notes

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