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ECON 2410 Chapter 19: Chapter 19- The Goods Market in an Open Economy.pdf

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mauvecaribou445
12 Mar 2014
School
University of Guelph
Department
Economics
Course
ECON 2410
Professor
Laurent Cellarier

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Document Summary

Chapter 19- the goods market in an open economy. Demand for domestic goods- the demand for domestic goods good by people, firms, and governments, both domestic and foreign. Domestic demand for goods- the sum of consumption, investment and government spending (cid:1852) (cid:1829)(cid:3397)(cid:1835)(cid:3397)(cid:1833)(cid:3398)(cid:1835)(cid:1839)(cid:2013)(cid:3415) (cid:3397)(cid:1850) (cid:1852) (cid:1829)(cid:3397)(cid:1835)(cid:3397)(cid:1833) (cid:1829)(cid:3397)(cid:1835)(cid:3397)(cid:1833)(cid:3404)(cid:1829)(cid:4666)(cid:1851)(cid:3398)(cid:1846)(cid:4667)(cid:3397)(cid:1835)(cid:4666)(cid:1851),(cid:1870)(cid:4667)(cid:3397)(cid:1833) (cid:1835)(cid:1839)(cid:3404)(cid:1835)(cid:1839)(cid:4666)(cid:1851),(cid:2013)(cid:4667) (cid:1850)(cid:3404)(cid:1850)(cid:4666)(cid:1851) ,(cid:2013)(cid:4667) (cid:1851)(cid:3404)(cid:1829)(cid:4666)(cid:1851)(cid:3398)(cid:1846)(cid:4667)(cid:3397)(cid:1835)(cid:4666)(cid:1851),(cid:1870)(cid:4667)(cid:3397)(cid:1833)(cid:3398)(cid:1835)(cid:1839)(cid:4666)(cid:1851),(cid:2013)(cid:4667)(cid:2013)(cid:3415) (cid:3397)(cid:1850)(cid:4666)(cid:1851) ,(cid:2013)(cid:4667) Imports- the purchase of foreign goods and services by domestic consumers, firms, and governments. Exports- the purchase of domestic goods and services by foreigners. Policy coordination- the joint design of macroeconomic policies to improve the economic situations in the two countries. Marshall-lerner condition- the condition under which a real depreciation leads to an increase in net exports (cid:1840)(cid:1850)(cid:3404)(cid:1850)(cid:4666)(cid:1851) ,(cid:2035)(cid:4667)(cid:3398)(cid:1835)(cid:1839)(cid:4666)(cid:1851),(cid:2035)(cid:4667)(cid:2013)(cid:3415)

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Related Questions

The components of GDP in the accompanying table were produced by the Bureau of Economic Analysis. Category Components of GDP in 2013 (billions of dollars)

Consumer spending

Durable goods $1,263.0

Nondurable goods 2,622.9

Services 7,615.7

Private investment spending

Fixed investment spending 2,564.0

Nonresidential 2,047.1

Structures 456.4

Equipment and intellectual property products 1,590.7

Residential 516.9

Change in private inventories 106.1

Net exports

Exports 2,259.9

Imports 2,757.2

Government purchases of goods and services and investment spending

Federal 1,245.9

National defense 770.7

Nondefense 475.1

State and local 1,879.6

1) Calculate 2013 consumer spending.

2) Calculate 2013 private investment spending.

3) Calculate 2013 net exports.

4) Calculate 2013 government purchases of goods and services and government investment spending.

5) Calculate 2013 gross domestic product.

6) Calculate 2013 consumer spending on services as a percentage of total consumer spending.

7) Calculate 2013 exports as a percentage of imports.

8) Calculate 2013 government purchases on national defense as a percentage of federal government purchases of goods and services.

Table 1.1.5. Gross Domestic Product
Line   2015 2016
III IV I II
1 Gross domestic product 18141.9 18222.8 18281.6 18436.5
2 Personal consumption expenditures 12356.9 12438.8 12498 12695.1
3 Goods 4043 4038.1 4008.7 4086
4 Durable goods 1364.7 1371.8 1366.6 1390.4
5 Nondurable goods 2678.4 2666.3 2642 2695.6
6 Services 8313.9 8400.6 8489.3 8609
7 Gross private domestic investment 3072.1 3059.9 3036.8 2973.6
8 Fixed investment 2995.3 2997.2 2994.8 2992.2
9 Nonresidential 2331.5 2311.3 2292.4 2294
10 Structures 508.5 487.8 486 479.3
11 Equipment 1099.7 1092.6 1066.3 1056.6
12 Intellectual property products 723.3 730.9 740.1 758.2
13 Residential 663.8 685.9 702.4 698.2
14 Change in private inventories 76.8 62.7 41.9 -18.6
15 Net exports of goods and services -523.4 -520.9 -507.4 -495.5
16 Exports 2259.1 2211.7 2179 2206.8
17 Goods 1495.6 1448.3 1410.9 1437.8
18 Services 763.5 763.4 768.1 769
19 Imports 2782.5 2732.6 2686.3 2702.3
20 Goods 2284.1 2235 2185.7 2199.1
21 Services 498.4 497.7 500.7 503.2
22 Government consumption expenditures and gross investment 3236.3 3245 3254.3 3263.4
23 Federal 1225 1234 1233.8 1239.2
24 National defense 729.3 735.6 731.4 729.3
25 Nondefense 495.7 498.4 502.4 509.9
26 State and local 2011.3 2011 2020.5 2024.1

&

Table 1.1.6. Real Gross Domestic +A1:F26Product, Chained Dollars
Line   2015 2016
III IV I II
1 Gross domestic product 16454.9 16490.7 16525 16570.2
2 Personal consumption expenditures 11255.9 11319.3 11365.2 11487.4
3 Goods 3932.6 3953.4 3964.7 4033.4
4 Durable goods 1512.4 1527.3 1524.9 1561.3
5 Nondurable goods 2451.3 2458.4 2471.1 2505.6
6 Services 7327.2 7369.8 7403.9 7460.5
7 Gross private domestic investment 2882.2 2865.4 2841.5 2769.9
8 Fixed investment 2794.5 2793.3 2786.7 2769
9 Nonresidential 2217.5 2198.8 2179.7 2174.8
10 Structures 453.4 435.1 435.2 425.8
11 Equipment 1085.7 1078.6 1052 1042
12 Intellectual property products 683.1 690.7 697.1 711.7
13 Residential 573.7 589.5 600.7 588.8
14 Change in private inventories 70.9 56.9 40.7 -12.4
15 Net exports of goods and services -547.1 -566.6 -566.3 -562
16 Exports 2120.4 2105.8 2102 2108.1
17 Goods 1440.7 1423.8 1424.1 1430.3
18 Services 679.3 681.1 677.3 677.4
19 Imports 2667.6 2672.4 2668.2 2670.1
20 Goods 2197.4 2201.4 2194.1 2194.3
21 Services 468.2 469 471.9 473.6
22 Government consumption expenditures and gross investment 2894.4 2901.7 2913.2 2902.1
23 Federal 1112.7 1123 1118.7 1117.8
24 National defense 669 676.3 670.9 665.7
25 Nondefense 443.1 446.2 447.2 451.4
26 State and local 1779.9 1777.1 1792.6 1782.6
27 Residual -49.2 -49.6 -46.5 -52.6

1.Why was the nominal GDP greater than real GDP in each of those quarters?

2.What was the percentage change in Nominal GDP for the most recent quarter compared to the previous quarter? What was the percentage change in real GDP for the two quarters?

3.What accounts for the difference in the two percentages?

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.