A country has $60 million of saving and domestic investment of $40 million. Net exports are 1.O -$100 million. 2. O $100 million. 3. O -$20 million. 4. O $20 million. Purchasing-power parity implies...

Extracted text: A country has $60 million of saving and domestic investment of $40 million. Net exports are 1.O -$100 million. 2. O $100 million. 3. O -$20 million. 4. O $20 million. Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of domestic currency must rise if the price levels in 1.O both countries fall. 2. O foreign countries rise. 3. O both countries rise. 4. O the domestic country rises. If purchasing power parity holds, the real interest rate is 1.O P/P* 2. O equal to 0 3. O equal to 1 4. O equal to nominal interest rate Consider a following closed economy. Y = 10,000 C = 6,000 T = 1,500 G = 1,700 The economists also estimate that the investment function is; | = 3,000 – 100r Obtain the value of Public saving: Private saving: Investment: real interest rate (r):


Extracted text: a) Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Over the next ten years we would expect that 1. O both countries will grow and at the same rate. 2. O the growth rate will not change in either country. 3. O the country that started with more capital per worker will grow faster. 4. O the country that started with less capital per worker will grow faster. b) All else equal, which of the following would tend to cause real GDP per person to rise? 1.O a reduction in saving rate. 2. O an increase in investment in human capital 3. a change from outward-oriented policies to inward-oriented policies 4. O a weakening of property rights