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16 Cards in this Set
- Front
- Back
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One year a country has positive net exports. The next year, it is still positive but smaller net exports. What happened? |
Its trade surplus decreased |
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Which both raise net exports? |
Exports rise, imports fall |
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NCO=? |
NX |
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Total purchases from other countries=60 bil total sold to other countries=35 bil
NX= |
25 bil |
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NCO is defined as the purchase of |
foreign assets by domestic residents minus the purchase of domestic assets foreign residents |
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Suppose foreign citizens purchase more US meds and US citizens invest more stock in foreign corporations. These actions do what to NX and NCO? |
Increase US NCO and NX |
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An increase in interest rate causes Q of loanable funds supplied to |
Rise because national savings rises |
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What would make Real interest rate increase and the equilibrium quantity of funds to increase? |
A rightward shift of the demand for loanable funds |
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A country has national saving of 60 bil, gov't expidentures of 30 bil, investment of 40 bil, and NCO of 20 bil. What is the supply of loanable funds? |
60 bil |
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If net exports are negative |
NCO is negative, so American assets bought by foreigners is greater than foreign assets bought by Americans. |
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ADAS model measures the relationship between |
output (real GDP) and price level |
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When the price level changes, which will change and cause a change in AD? |
The real value of wealth, the interest rate, value of currency in the market for foreign exchange. |
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Which both shift AD to the right |
NX rises for some reason other than a price change and money supply rises |
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The interest rate effect |
depends on the idea that an increase in interest rates decreases the quantity of goods demanded |
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When the Fed increases the money supply, what happens to the equilibrium interest rate |
eq interest rate decreases |
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If taxes decrease, what happens to consumption and AD? |
consumption decreases and AD shifts rightward. |
