MEDIUM
12TH CBSE
IMPORTANT
Earn 100

What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?

Important Questions on Open Economy Macroeconomics

HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 11
Why is the open economy autonomous expenditure multiplier smaller than the closed economy one?
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 12
Calculate the open economy multiplier with proportional taxes, T = tY , instead of lump-sum taxes as assumed in the text.
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 13
Suppose C = 40 + 0.8Y D, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y (a) Find equilibrium income. (b) Find the net export balance at equilibrium income (c) What happens to equilibrium income and the net export balance when the government purchases increase from 40 and 50?
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 14
Suppose C = 40 + 0.8Y D, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y. If exports change to X = 100, find the change in equilibrium income and the net export balance.
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 15
Suppose the exchange rate between the Rupee and the dollar was Rs. 30=1$ in the year 2010. Suppose the prices have doubled in India over 20 years while they have remained fixed in USA. What, according to the purchasing power parity theory will be the exchange rate between dollar and rupee in the year 2030.
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 16
If inflation is higher in country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 17
Should a current account deficit be a cause for alarm? Explain
HARD
12TH CBSE
IMPORTANT
Introductory Macroeconomics>Chapter 6 - Open Economy Macroeconomics>Q 18
Suppose C = 100 + 0.75Y D, I = 500, G = 750, taxes are 20 per cent of income, X = 150, M = 100 + 0.2Y . Calculate equilibrium income, the budget deficit or surplus and the trade deficit or surplus.