Find what happens to real interest rate and the ca balance

Reference no: EM13242891

Consider a two-country model. Assume that the Current Account Balance is initially positive for one country. Assume that a permanent positive shock to production affects the country which initially had a positive current account balance. Assume that the shift increases the MPK. Graphically, indicating the effect on the commodity market clearing. Be clear to indicate what happens to the real interest rate and the CA balance. Explain the intuition behind the graphs.

Reference no: EM13242891

Questions Cloud

Major branches of the muslim faith did the sultan belong to : Name the Kurdish muslim Sultan and general who was the archnemisis of king Richard I of England, better known as Richard the lion heart. Which of the major braches of the Muslim faith did the Sultan belong to?

Describe the mental model : Identify a mental model you hold about someone, a department, your organization, or even your customers (internal or external). With the perception in mind, proceed with the assignment.

What happens to the steady state real interest rate : Suppose that the production function takes the form Y = AKa*L1-a, where a?= 1/3. Assume that the saving rate, s = 0.15 and the rate of depreciation d = 0.05 Further, let A = 1, and L = 2, initially.

Explain the activity of a radioactive substance : You are using a Geiger counter to measure the activity of a radioactive substance over the course of several minutes. If the reading of 400. counts has diminished to 100. counts after 35.2 minutes, what is the half-life of this substance

Find what happens to real interest rate and the ca balance : Consider a two-country model. Assume that the Current Account Balance is initially positive for one country. Assume that a permanent positive shock to production affects the country which initially had a positive current account balance.

Find the total negative charge in a solid copper penny : Pennies today are copper-covered zinc, What are the total positive charge and total negative charge in a solid copper penny that is electrically neutral

Quality and patient safety by setting : Quality and Patient Safety By Setting

Explain toluene has a total vapor pressure : A solution of 75.0 of benzene and 75.0 of toluene has a total vapor pressure of 80.9 at 303 . Another solution of 100.0 benzene and 50.0 toluene has a total vapor pressure of 93.9 at this temperature.

Write down interest parity condition as viewed by investor : Suppose that the return on domestic bonds held by foreigners in country i are subsidized at the rate s and that returns on domestic bonds held by residents of country j are taxed at the rate.

User Account

All Pages