Please provide answers only, no explanation is necessary. Make sure answer go with question # and part (i.e. 1a, 1b, 1c, etc...). MAKE FORMAT EASY TO READ AND PLEASE DO THE GRAPHS THAT ARE INCLUDED IN THE QUESTIONS!
3.
3. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 19805 was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 19805. This caused net exports at any given exchange rate to decrease v . 3. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 19805. This caused net exports at any given exchange rate to decrease V . decrease Indicate the effect of this shift in net exports on the U.S. ureign exchange. increase {7-D Indicate the effect of this shift in net exports on the U.S. market for foreign exchange. Supply O Demand Supply Real Exchange Rate Demand Quantity of DollarsAccording to this model, which of the following statements are true as a result of the quality change? Check all that apply. The real exchange rate increases. C] There is no change in the real interest rate. C] The trade balance increases. C] Net capital outflow is unchanged. True or False: The claim that some people made in the popular press is not consistent with the model in this chapter. 0 True False True or False: The change in the real exchange rate that resulted from the decline in the quality of U.S. products may increase our standard of living. True 0 False 5. Problems and Applications Q5 Suppose the Canadians suddenly have a switch in taste from Japanese automobiles to American automobiles. On the following graph, indicate what happens to the demand for U.S. dollars in the market for foreign-currency exchange as a result of this change in tastes. Supply O Demand Supply Real Exchange Rate Demand Quantity of DollarsThis causes the value of dollars in the market for foreign-currency exchange to rise V , and the equilibrium quantity of net exports to remain unchanged V . .I' til .'l on Quantity of Dollars This causes the value of dollars in the market for foreign-currency exchange to rise v , and the equilibrium quantity of net exports to remain unchanged V . remain unchanged Quantity of Dollars increase decrease _ of dollars in the market for foreign-currency exchange to rise v , and the equilibrium quantity of net exports to remain unchanged V . 6. Problems and Applications Q6 A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If we subsidize U.S. exports instead, we can reduce the deficit by increasing our competitiveness." Show the effect of an export subsidy on the market for foreign exchange. Supply O Demand O Supply Real Exchange Rate Demand Quantity of DollarsTrue or False: The US. real exchange rate appreciates as a result of this export subsidy. True 0 False The export subsidy leads to a decrease V in the trade deficit. True or False: The U.S. real - appreciates as a result of this export subsidy. no changes True an increase 0 False a decrease The export subsidy leads to a decrease V in the trade deficit. Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies Y the fiscal deficit, thereby Y public saving. Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies V the fiscal deficit, thereby V public saving. increases On the following graph, indicate the effect this has on the . decreases Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies V the fiscal deficit, thereby V public saving. On the following graph, indicate the effect this has on the US. market for loanable funds. decreasing increasing /;.\\ On the following graph, indicate the effect this has on the U.S. market for loanable funds. O Supply Demand O Supply Real Interest Rate Demand Quantity of Loanable FundsGiven the change in the reai interest rate, show the effect this has on net capital outow. /'\\ K3? NCO O Movable Point Real Interest Rate 0 NCO Net Capital Outow Which of the following is true as a result of this policy? Check all that apply. C] The equilibrium level of net exports will remain unchanged. C] The real exchange rate will fall. C] The supply of dollars in the foreign exchange market will decrease. When real interest rates decrease across Europe, this causes U.S. net capital outflow to decrease. The following graphs capture the effect this has on the market for loanable funds and net capital outflow: /_\\ /_\\ K3 K?) SUPply a: (I) 'a a n: n: g '5 o 5 5 E E at II I D NCO 1 1 I I I I 02 Nco2 Quantity of Loanable Funds Net Capital Outow Indicate the effect these previous changes have on the US. market for foreigncurrency exchange. _\\ ('0 Supply Demand Supply ----------+ Real Exchange Rate Demand Quantity of Dollars As a result, the U.S. real exchange rate depreciates. 0 True 0 False

Question

Please provide answers only, no explanation is necessary. Make sure answer go with question # and part (i.e. 1a, 1b, 1c, etc...). MAKE FORMAT EASY TO READ AND PLEASE DO THE GRAPHS THAT ARE INCLUDED IN THE QUESTIONS!

3.

3. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 19805 was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 19805. This caused net exports at any given exchange rate to decrease v . 3. Problems and Applications Q3 The chapter notes that the rise in the U.S. trade deficit during the 1980s was due largely to the rise in the U.S. budget deficit. On the other hand, some in the popular press have claimed that the increased trade deficit resulted from a decline in the quality of U.S. products relative to foreign products. Assume that U.S. products did decline in relative quality during the 19805. This caused net exports at any given exchange rate to decrease V . decrease Indicate the effect of this shift in net exports on the U.S. ureign exchange. increase {7-D Indicate the effect of this shift in net exports on the U.S. market for foreign exchange. Supply O Demand Supply Real Exchange Rate Demand Quantity of DollarsAccording to this model, which of the following statements are true as a result of the quality change? Check all that apply. The real exchange rate increases. C] There is no change in the real interest rate. C] The trade balance increases. C] Net capital outflow is unchanged. True or False: The claim that some people made in the popular press is not consistent with the model in this chapter. 0 True False True or False: The change in the real exchange rate that resulted from the decline in the quality of U.S. products may increase our standard of living. True 0 False 5. Problems and Applications Q5 Suppose the Canadians suddenly have a switch in taste from Japanese automobiles to American automobiles. On the following graph, indicate what happens to the demand for U.S. dollars in the market for foreign-currency exchange as a result of this change in tastes. Supply O Demand Supply Real Exchange Rate Demand Quantity of DollarsThis causes the value of dollars in the market for foreign-currency exchange to rise V , and the equilibrium quantity of net exports to remain unchanged V . .I' til .'l on Quantity of Dollars This causes the value of dollars in the market for foreign-currency exchange to rise v , and the equilibrium quantity of net exports to remain unchanged V . remain unchanged Quantity of Dollars increase decrease _ of dollars in the market for foreign-currency exchange to rise v , and the equilibrium quantity of net exports to remain unchanged V . 6. Problems and Applications Q6 A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If we subsidize U.S. exports instead, we can reduce the deficit by increasing our competitiveness." Show the effect of an export subsidy on the market for foreign exchange. Supply O Demand O Supply Real Exchange Rate Demand Quantity of DollarsTrue or False: The US. real exchange rate appreciates as a result of this export subsidy. True 0 False The export subsidy leads to a decrease V in the trade deficit. True or False: The U.S. real - appreciates as a result of this export subsidy. no changes True an increase 0 False a decrease The export subsidy leads to a decrease V in the trade deficit. Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies Y the fiscal deficit, thereby Y public saving. Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies V the fiscal deficit, thereby V public saving. increases On the following graph, indicate the effect this has on the . decreases Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies V the fiscal deficit, thereby V public saving. On the following graph, indicate the effect this has on the US. market for loanable funds. decreasing increasing /;.\\ On the following graph, indicate the effect this has on the U.S. market for loanable funds. O Supply Demand O Supply Real Interest Rate Demand Quantity of Loanable FundsGiven the change in the reai interest rate, show the effect this has on net capital outow. /'\\ K3? NCO O Movable Point Real Interest Rate 0 NCO Net Capital Outow Which of the following is true as a result of this policy? Check all that apply. C] The equilibrium level of net exports will remain unchanged. C] The real exchange rate will fall. C] The supply of dollars in the foreign exchange market will decrease. When real interest rates decrease across Europe, this causes U.S. net capital outflow to decrease. The following graphs capture the effect this has on the market for loanable funds and net capital outflow: /_\\ /_\\ K3 K?) SUPply a: (I) 'a a n: n: g '5 o 5 5 E E at II I D NCO 1 1 I I I I 02 Nco2 Quantity of Loanable Funds Net Capital Outow Indicate the effect these previous changes have on the US. market for foreigncurrency exchange. _\\ ('0 Supply Demand Supply ----------+ Real Exchange Rate Demand Quantity of Dollars As a result, the U.S. real exchange rate depreciates. 0 True 0 False