In an open economy,a change in domestic net foreign asset depends on how much is saved, and on investment,which reduces the domestic net foreign asset. True or False.
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- What are the trends regarding foreign direct investment (FDI) in the world economy?What are the benefits and costs associated with foreign portfolio investment (FPI)?For an open economy: with no depreciation, GNP=GDP. imports are included in the calculation of GNP but not of GDP. more imports will, all the rest being constant, increase GNP. net international transfer payments are included in GNP but not in GDP.
- What is Foreign Direct Investment (FDI) all about?How does each of the following changes affect the real gross domestic product and price level of an open economy in the short run? Explain. The depreciation of the country’s currency in the foreign exchange market.The following equations describe a small open-economy: C = 10 + 0.5Y I = 160 - 50r NX = 80 - 0.1Y - e e = 50 - 0.1Y + B (r-r*) G= 10 where C is consumption, I is investment, Y is domestic output, r is the domestic real interest rate, NX is net exports, e is the real exchange rate, G is government spending and r* is the foreign real interest rate. (a) Suppose that ß is fairly small, ß = 5, full employment output is Y = 400 and r* = 0.1. What is the equilibrium value of the domestic interest rate, r? (b) Consider instead that ß is fairly large, B = 1000, where again Y = 400 and r* = 0.1. What is the equilibrium value of the domestic interest rate? (c) What happens to r as ß increases? Does r converge to r* as ß approaches infinity? What type of small open economy model does this resemble?
- For Turkey, would each of the following transactions affect net exports or net capital outflow or both? In addition, would the same transactions represent an increase or a decrease in that variable? For each transaction, choose the correct answer from the drop down menu: Al Kharafi family from Kuwait buys a house in Trabzon. Choose. Türk Telekom buys network equipment from Ericsson, a Choose. firm in Sweden. Increase Net Exports, Decrease Net Capital Outflow Katya and Igor Oblomov from Moscow spend their Decrease Net Exports, Decrease Net Capital Outflow vacation in Antalya. Decrease Net Exports, Increase Net Capital Outflow Ford Otosan sells Transit vans to Germany. Increase Net Capital Outflow Arçelik buys Hitachi's Asian business for $300 million. Decrease Net Capital Outflow Increase Net Exports, Increase Net Capital Outflowwhy is the recovery of global economy, especially the Euro Zone, so important to the South African Economy.Under a closed system, when net exports equals 0, what must be true about investment spending? A Investment Consumption B Investment = Savings (C) Investment = Government Spending D) Investment Government spending - taxes
- What is the saving and investment equation? If national saving declines what will happen to domestic investment and net foreign investment?The table given below shows the levels of real GDP (Y) and the corresponding levels of consumption (C), planned investment (I), export (EX), and import (IM) of an open economy. Assume that in this country, the aggregate price level is constant, the interest rate is fixed, and there are no taxes. What is the equilibrium level of real GDP?Effect of Foreign Interest Rates - Peter Thiel. If foreign interest rates rise, this will cause the net capital outflow to increase, but it will also cause domestic interest rates to increase. Since domestic interest rates cause the net capital outflow to decrease, what will really happen to the net capital outflow: will it increase or decrease?