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Dear Tutor, need your kind assistance on question below. Thank you in advance. CHAPTER 11 [THEORY OF OPEN ECONOMY] PROBLEMS AND APPLICATIONS PAGE 402-403 (12.
Dear Tutor, need your kind assistance on question below. Thank you in advance.
CHAPTER 11 [THEORY OF OPEN ECONOMY] PROBLEMS AND APPLICATIONS PAGE 402-403 (12. If a local newspaper reported that the Malaysian government will shore up the sliding ringgit by working to cut record budget and trade deficits. a} According to the model in this chapter, would a reduction in the budget decit reduce the trade decit? Would it raise the value of ringit? Explain. b] Suppose that a reduction in the budget deficit made international investors more condent in the Malaysian economy. How would this increase in condence affect the value of ringgit? How would it affect the trade decit? C16. Suppose Indonesians suddenly develop a strong taste of Kelontan Batik. Answer the following questions in words and with diagram. a} What happens to the demand for ringgit in the market for foreign-currency exchange? b] What happens to the value of ringgit in the market for foreign-currency exchange? c} What happens to the quantity of net exports? C19. Suppose that Malaysians decide to increase their saving. al If the elasticity of Malaysian net capital outow with respect to the real interest rate is very high, will this increase in private saving have a large or small effect on Malaysian domestic investment? b} If the elasticity of Malaysian exports with respect the real exchange rate is very low, will this increase in private saving have a large or small effect on the Malaysian real exchange rateStep by Step Solution
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