As a global manager, create a scenario analysis using the three-sector model: real loanable funds market, real goods market, and the foreign exchange market for the following scenario:
In the post-World War II period, the economies of Japan and Germany were rebuilt, and both economies were able to achieve economies of scale in the steel and automobile industries. In the mid-1990s, India and China built labor-intensive industries in the apparel industry, followed by other labor-intensive industries that expanded through an export-led growth policy on the part of China. Vietnam followed this type of policy beginning in 1986. The country has achieved stable growth, low inflation, and increasing prosperity. In the early 2000s, South Korea became a major producer of automobiles and also expanded production in technology and related consumer goods for export. Currently, high-income economies (using the World Bank GNI per capita classification system) in North America, Europe, and the Far East (the Triad Area) engage extensively in trade in consumer goods. We find that the current level of global exports is about $19 trillion. The trade between nations of the Triad Area represents about $9.5 trillion. In the euro-zone, there is a division between stronger nations (Germany and France, for example) compared to other nations facing significant macroeconomic problems (Greece
Step 1: Describe the initial economic setting of the three major macroeconomic markets (i.e., the real goods market, real loanable funds market, and foreign exchange market) for the nations being analyzed.
Step 2: Identify the economic shock (or expected shock) to the nations.
Step 3: Analyze the chain reaction of economic interactions.
As a global manager, create a scenario analysis using the three-sector model: real loanable funds market, real goods market, and the foreign exchange market for the following scenario:
In the post-World War II period, the economies of Japan and Germany were rebuilt, and both economies were able to achieve economies of scale in the steel and automobile industries. In the mid-1990s, India and China built labor-intensive industries in the apparel industry, followed by other labor-intensive industries that expanded through an export-led growth policy on the part of China. Vietnam followed this type of policy beginning in 1986. The country has achieved stable growth, low inflation, and increasing prosperity. In the early 2000s, South Korea became a major producer of automobiles and also expanded production in technology and related consumer goods for export. Currently, high-income economies (using the World Bank GNI per capita classification system) in North America, Europe, and the Far East (the Triad Area) engage extensively in trade in consumer goods. We find that the current level of global exports is about $19 trillion. The trade between nations of the Triad Area represents about $9.5 trillion. In the euro-zone, there is a division between stronger nations (Germany and France, for example) compared to other nations facing significant macroeconomic problems (Greece
Step 1: Describe the initial economic setting of the three major macroeconomic markets (i.e., the real goods market, real loanable funds market, and foreign exchange market) for the nations being analyzed.
Step 2: Identify the economic shock (or expected shock) to the nations.
Step 3: Analyze the chain reaction of economic interactions.
