What is the impact of a 5% drop in exports on u.s. gdp

Reference no: EM131145600

A European recession and the U.S. economy

a. In 2010, European Union spending on U.S. goods accounted for 23% of U.S. exports (see Table 18-2), and U.S. exports amounted to 13% of U.S. GDP (see Table 18-1). What was the share of European Union spending on U.S. goods relative to U.S. GDP?

b. Assume that the multiplier in the United States is 2 and that a major slump in Europe would reduce output and imports from the U.S. by 5% (relative to its normal level). Given your answer to part (a), what is the impact on U.S. GDP of the European slump?

c. If the European slump also leads to a slowdown of the other economies that import goods from the United States, the effect could be larger. To put a bound to the size of the effect, assume that U.S. exports decrease by 5% (as a result of changes in foreign output) in one year. What is the impact of a 5% drop in exports on U.S. GDP?

d. Comment on this statement. "Unless Europe can avoid a major slump following the problems with sovereign debt and the Euro, U.S. growth will grind to a halt.

Reference no: EM131145600

Questions Cloud

Establish task precedence relationships : Establish task precedence relationships by determining and specifying predecessors for each activity. - Identify a minimum of five tangible deliverables.

Relationship of ethics and professional behavior : Write a 1,400- to 1,750-word paper in which you analyze the relationship between ethics and professional behavior in the administration of criminal justice. Explain the role of critical thinking with regard to the relationship of ethics and profes..

Compute marginal cost and average cost of cutting lawns : Given his current output level, compute his marginal cost and average cost of cutting lawns.

Describe effective communication in a business environment : Write a one to two (1-2) page paper in which you: Discuss at least three (3) reasons why you perceived the communication to be effective, and explain the resulting impact to the business

What is the impact of a 5% drop in exports on u.s. gdp : Assume that the multiplier in the United States is 2 and that a major slump in Europe would reduce output and imports from the U.S. by 5% (relative to its normal level). Given your answer to part (a), what is the impact on U.S. GDP of the European..

How is the source an example of applied business research : How is the source an example of applied business research? How did the author defend the use of a particular research method and design? What was the rationale for the author's academic foundation?

Describe which motivation being targeted in the ad : Write a 700- to 1,050-word (about two to three pages) paper about motivation in which you do the following: Describe which motivation(s) being targeted in the ad, and explain which motivations are not being targeted

How the author defended using a specific research method : Justifies-based on the author's reasoning-the setting for the applied business problem, that is, how the author defended using a specific research method and design.

What is the importance of personnel management : Using specific elements of the police organizational structure, where does it appear that you would need to reorganize the department, especially to accommodate this change in policing philosophy? Explain.

User Account

All Pages