In Country A, the real exchange rate (8) = 1.3, the level of Exports (X) = 55, and the level of Imports (IM) = 55. A 1% appreciation in the real exchange rate leads to a proportional increase in IM of 2.1% and a proportional decrease in X of 2.25%. Panel A What should be the resultant proportional change in trade balance, if the Marshall-Lerner condition has to be satisfied in the economy of Country A? Proportional change in trade deficit = %. (Round your answer to two decimal places and include a minus sign if necessary.) ZZ Country B is in a situation of trade surplus, but the output in the economy is below the natural level of output. The graph in Panel A depicts the current output and demand equilibrium in Country B. The graph in Panel B depicts the level of trade surplus in Country B. Demand, z Yis the current level of output in Country B and Y is its natural level of output. TB is the trade balance curve for Country B. Which of the following policy mixes are appropriate for Country B, if it wishes to increase its total output to Y', while maintaining a surplus trade balance? Y Y' Y Y Output, Y What should be the resultant proportional change in trade balance, if the Marshall-Lerner condition has to be satisfied in the economy of Country A? Proportional change in trade deficit = [%. (Round your answer to two decimal places and include a minus sign if necessary.) Country B is in a situation of trade surplus, but the output in the economy is below the natural level of output. The graph in Panel A depicts the current output and demand equilibrium in Country B. The graph in Panel B depicts the level of trade surplus in Country B. Yis the current level of output in Country B and Y is its natural level of output. TB is the trade balance curve for Country B. Panel B Which of the following policy mixes are appropriate for Country B, if it wishes to increase its total output to Y', while maintaining a surplus trade balance? Net Exports TB O A. Undertake policies for increasing government expenditure and keeping the real exchange rate unchanged. OB. Undertake policies for increasing government expenditure and the real exchange rate. OC. Undertake policies for increasing government expenditure and depreciating the real exchange rate. OD. Undertake policies for increasing government expenditure. Output Click to select your answerial In Country A, the real exchange rate (8) = 1.3, the level of Exports (X) = 55, and the level of Imports (IM) = 55. A 1% appreciation in the real exchange rate leads to a proportional increase in IM of 2.1% and a proportional decrease in X of 2.25%. Panel A What should be the resultant proportional change in trade balance, if the Marshall-Lerner condition has to be satisfied in the economy of Country A? Proportional change in trade deficit = %. (Round your answer to two decimal places and include a minus sign if necessary.) ZZ Country B is in a situation of trade surplus, but the output in the economy is below the natural level of output. The graph in Panel A depicts the current output and demand equilibrium in Country B. The graph in Panel B depicts the level of trade surplus in Country B. Demand, z Yis the current level of output in Country B and Y is its natural level of output. TB is the trade balance curve for Country B. Which of the following policy mixes are appropriate for Country B, if it wishes to increase its total output to Y', while maintaining a surplus trade balance? Y Y' Y Y Output, Y What should be the resultant proportional change in trade balance, if the Marshall-Lerner condition has to be satisfied in the economy of Country A? Proportional change in trade deficit = [%. (Round your answer to two decimal places and include a minus sign if necessary.) Country B is in a situation of trade surplus, but the output in the economy is below the natural level of output. The graph in Panel A depicts the current output and demand equilibrium in Country B. The graph in Panel B depicts the level of trade surplus in Country B. Yis the current level of output in Country B and Y is its natural level of output. TB is the trade balance curve for Country B. Panel B Which of the following policy mixes are appropriate for Country B, if it wishes to increase its total output to Y', while maintaining a surplus trade balance? Net Exports TB O A. Undertake policies for increasing government expenditure and keeping the real exchange rate unchanged. OB. Undertake policies for increasing government expenditure and the real exchange rate. OC. Undertake policies for increasing government expenditure and depreciating the real exchange rate. OD. Undertake policies for increasing government expenditure. Output Click to select your answerial
