宏观经济学课后习题答案Ch 29Macroeconomics in an Open Economy.docx

宏观经济学课后习题答案Ch 29Macroeconomics in an Open Economy.docx

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宏观经济学课后习题答案Ch29MacroeconomicsinanOpenEconomy

CHAPTER29

MacroeconomicsinanOpenEconomy

1.ChapterSummary

2.LearningObjectives

3.ChapterOutline

TeachingTips/TopicsforDiscussion

4.SolvedProblems

5.SolutionstoReviewQuestionsandProblemsandApplications

1.ChapterSummary

Itisessentialtounderstandhowthebalanceofpaymentsiscalculated.Thebalanceofpaymentsistherecordofacountry’stradewithothercountriesingoods,services,andassets.Thecurrentandfinancialaccountsareapartofthebalanceofpayments.Thecurrentaccountrecordsacountry’snetexports,netinvestmentincome,andnettransfers.Thefinancialaccountshowsinvestmentsacountryhasmadeabroadandforeigninvestmentsreceivedbythecountry.Thebalanceoftradeisthedifferencebetweenthevalueofthegoodsacountryexportsandthevalueofthegoodsacountryimports.Thesumofthecurrentaccountandthefinancialaccountmustequalzero.Therefore,thebalanceofpaymentsmustalsoequalzero.

Theconceptofexchangeratesisveryimportantinmacroeconomics.Changesinexchangeratesaffectinternationaltrade.Exchangeratesaredeterminedintheforeignexchangemarketbythedemandandsupplyofacountry’scurrency.Changesintheexchangeratearecausedbyshiftsindemandorsupply.ThethreemainsetsoffactorsthatcausethesupplyanddemandcurvesintheforeignexchangemarkettoshiftarechangesinthedemandforU.S.-producedgoodsandservicesandchangeinthedemandforforeign-producedgoodsandservices;changesinthedesiretoinvestintheUnitedStatesandchangesinthedesiretoinvestinforeigncountries;andchangesintheexpectationsofcurrencytraders—particularlyspeculators-concerningthelikelyfuturevaluesofthedollarandthelikelyfuturevaluesofforeigncurrencies.

Thecapitalaccountisequaltonetcapitalflows,whichisequaltonetforeigninvestmentbutwiththeoppositesign.Therefore,netexportsmustequalnetforeigninvestment.Nationalsavingisequaltoprivatesavingplusgovernmentsaving.Privatesavingisequaltonationalincomeminusconsumptionandminustaxes.Governmentsavingisthedifferencebetweentaxesandgovernmentspending.Nationalincome（GDP）isequaltothesumofinvestment,consumption,governmentspending,andnetexports.Thesumofthedomesticinvestmentandthenetforeigninvestmentisthesavingandinvestmentequation.

Whenthegovernmentrunsabudgetdeficit,nationalsavingwilldeclineunlessprivatesavingincreasesbythefullamountofthebudgetdeficit,whichisunlikely.Asthesavingandinvestmentequationshows,theresultofadeclineinnationalsavingmustbeadeclineineitherdomesticinvestmentornetforeigninvestment.Inaclosedeconomy,themaineffectoflowerinterestratesisondomesticinvestmentspendingandpurchasesofconsumerdurables.Inanopeneconomy,lowerinterestrateswillalsocauseanincreaseinnetexports.Inaclosedeconomy,themaineffectisonceagainondomesticinvestmentandpurchasesofconsumerdurables.Inanopeneconomy,higherinterestrateswillalsoreducenetexports.Wecanconcludethatmonetarypolicyhasagreaterimpactonaggregatedemandinanopeneconomythaninaclosedeconomy.Inaclosedeconomy,themaineffectofhigherinterestratesisondomesticinvestmentspendingandspendingonconsumerdurables.Inanopeneconomy,higherinterestrateswillalsoreducenetexports.Inaclosedeconomy,lowerinterestratesincreasedomesticinvestmentandspendingonconsumerdurables.Inanopeneconomy,lowerinterestratesalsoincreasenetexports.Wecanconcludethatfiscalpolicyhasasmallerimpactonaggregatedemandinanopeneconomythaninaclosedeconomy.

2.LearningObjectives

Studentsshouldbeableto:

∙Explainhowthebalanceofpaymentsiscalculated.

∙Explainhowexchangeratesaredeterminedandhowchangesinexchangeratesaffectthepricesofimportsandexports.

∙Explainthesavingandinvestmentequation.

∙Explaintheeffectofgovernmentbudgetdeficitoninvestmentinanopeneconomy.

∙Discussthedifferencebetweentheeffectivenessofmonetaryandfiscalpolicyinanopeneconomyandinaclosedeconomy.

3.ChapterOutline

ChineseTowelsInvadeJapan

1.Producingtextileproducts,suchastowels,andexportingthemaroundtheworldwasthebasisofJapan’sindustrializationintheearlytwentiethcentury.MotokiHirabayashiownsOrimCompany,afirmthatmakestowelsintheJapanesecityofImabari.ItsstrongestcompetitorshavebeenChinesefirms,whichpaytheirworkersconsiderablylowerwages.Japanesefirmshadbeenabletoovercomethislargedifferenceinwagesbyusingcomputer-controlledmachinery.Bytheearly2000s,Chinesefirmshadbeguntousethesamecomputer-controlledmachineryusedbyOrim.BothChinaandJapanmaintainhighlevelsofnetexportsthatcancausepoliticalproblemswiththeirtradingpartners.

►Teachingtips:

Attheendofthischapter,AnInsideLookdiscussespotentialproblemscausedbyimbalancesintheinternationalfinancialsystem.Thesereadingscanbeusedasthebasisforclassroomdiscussion,homeworkassignmentsorexaminationquestionsregardingthecausesandconsequencesoftheU.S.currentaccountdeficit.

TheBalanceofPayments:

LinkingtheUnitedStatestotheInternationalEconomy

1.Therearetwotypesofeconomies:

A.Openeconomiesinteractbytradinggoodsandservicesandbymakinginvestmentsineachother’seconomies.

B.Aclosedeconomyhasnointeractionsintradeorfinancewithothercountries.

Thebalanceofpaymentsisarecordofacountry’stradewithothercountriesingoods,services,andassets.

2.Thebalanceofpaymentscontainsthreeaccounts:

A.Thecurrentaccountrecordsacountry’snetexports,netinvestmentincome,andnettransfers.

I.Thebalanceoftradeisthedifferencebetweenthevalueofthegoodsacountryexportsandthevalueofthegoodsacountryimports.

i.Netexportsequalsthesumofthebalanceoftradeandthebalanceofservices.

B.Thefinancialaccountrecordspurchasesofassetsacountyhasmadeabroadandforeignpurchasesofassetsinthecountry.

I.ThereisacapitaloutflowfromtheU.S.whenaninvestorintheU.S.buysabondissuedbyaforeigncompanyorgovernmentorwhenaU.S.firmbuildsafactoryinanothercountry.

II.ThereisacapitalinflowintotheU.S.whenaforeigninvestorbuysabondissuedbyaU.S.firmorbythegovernmentorwhenaforeignfirmbuildsafactoryintheU.S.

III.Whenfirmsbuildorbuyfacilitiesinforeigncountries,theyareengaginginforeigndirectinvestment.

IV.Wheninvestorsbuystockorbondsissuedinanothercountry,theyareengaginginforeignportfolioinvestment.

V.Netcapitalflowsisthedifferencebetweencapitalinflowsandcapitaloutflows.

Netforeigninvestmentisthedifferencebetweencapitaloutflowsfromacountryandcapitalinflows,alsoequaltonetforeigndirectinvestmentplusnetforeignportfolioinvestment.

C.Thecapitalaccountrecordsrelativelyminortransactions,suchasmigrants’transfersandsalesandpurchasesofnonproduced,nonfinancialassets.

3.Whyisthebalanceofpaymentsalwayszero?

A.Thesumofthecurrentaccountbalance,financialaccountbalance,andthecapitalaccountbalanceequalsthebalanceofpayments

I.Thebalanceofpaymentsisalwayszero.

i.Tomakethebalanceonthecurrentaccountequalthebalanceonthefinancialaccount,thebalanceofpaymentsincludesanentrycalledthestatisticaldiscrepancy.

ii.Ifthebalanceonthecapitalaccountwasincluded,thestatisticaldiscrepancytakesonavalueequaltothedifferencebetweenthecurrentaccountbalanceandthesumofthebalanceonthefinancialaccountandthebalanceonthecapitalaccount.

iii.Ifitdoesnotequalzero,ameasurementerrormusthaveoccurred.Someimportsorexportsofgoodsandservicesorsomecapitalinflowsorcapitaloutflowsmustnothavebeenmeasuredaccurately.

iv.Changesinforeignholdingsofdollarsareknownasofficialreservetransactions.

►Teachingtips:

ItwillbeusefulforstudentstoseetheBalanceofPaymentsoftheUnitedStatesin2004asillustratedintable17-1.Figure17-1couldbeusedtoshowtradeflowsfortheU.S.andJapanin2004.Oneneedstoreinforcethisthroughclassroomdiscussion,useofnumericalexamples,andhomeworkassignments.AssignSolvedProblem17-1andproblems4and5oftheProblemsandApplicationssectionattheendofthechaptertoreinforcestudents’understandingofthesetopics.

Don’tLetThisHappenToYou!

clarifiesthedifferencebetweenbalanceoftrade,theCurrentAccountBalance,andtheBalanceofPayments.Assignproblem3oftheProblemsandApplicationssectionattheendofthechaptertoreinforcestudents’understandingofthesetopics.

TheForeignExchangeMarketandExchangeRates

1.Thenominalexchangerateisthevalueofonecountry’scurrencyintermsofanothercountry’scurrency.Economistsalsocalculatetherealexchangerate,whichcorrectsthenominalexchangerateforchangesinpricesofgoodsandservices.

2.TherearethreesourcesofforeigncurrencydemandfortheU.S.dollar:

A.ForeignfirmsandconsumerswhowanttobuygoodsandservicesproducedintheU.S.

I.Speculatorsarecurrencytraderswhobuyandsellforeignexchangeinanattempttoprofitbychangesinexchangerates.

i.Thedemandcurvefordollarsshiftstotherightwhenincomesinaforeigncountryrise,wheninterestratesintheU.S.rise,orwhenspeculatorsdecidethatthevalueofthedollarwillriserelativetothevalueoftheforeigncurrency.

B.ForeignfirmsandconsumerswhowanttoinvestintheU.S.eitherthroughforeigndirectinvestment-buyingorbuildingfactoriesorotherfaciliti