Equality between net capital outflow and net exports

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1. Why there is always an equality between net capital outflow and net exports? Explain.

2. Explain the model of aggregate demand and aggregate supply curve.

3. Assuming that other things being the same what will happen to the price level and the quantity of output when the short run aggregate supply curve shifts to the right? Explain.

4. In the U.S. a box of tea costs $7. The same box of tea in Uganda costs 12,000 schillings (the currency of Uganda). If the real exchange rate is 5/4, what is the nominal exchange rate? Show your work.

Reference no: EM131378495

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