Economics

An example of how GNP accounts for services provided by foreign-owned

An example of how GNP accounts for services provided by foreign-owned capital (and GDP does not) is A) earnings of a Spanish factory with British owners counts only in Spain’s GDP. B) earnings of a Spanish factory with British owners counts only in Britain’s GNP. C) earnings of a Spanish factory counts in Spain’s GNP […]

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Date: September 10th, 2020

Is a depreciation of the dollar/euro exchange rate correlated with a d

Is a depreciation of the dollar/euro exchange rate correlated with a decrease in the dollar return on U.S. deposits? What will be an ideal response?   ANSWER No. Assume that the Interest Parity is maintained, i.e., R$ = + ( – )/ Holding constant, one would expect a depreciation of the dollar/euro exchange rate (i.e. […]

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Date: September 10th, 2020

Describe how Mexico’s development strategy changed from the 1950s to t

Describe how Mexico’s development strategy changed from the 1950s to today and how that changed the production location decisions of firms. What will be an ideal response?   ANSWER From the 1950s throughout the 1970s Mexico’s development policy emphasized the domestic market and firms found that it was less profitable to export. Domestic production was […]

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Date: September 10th, 2020

If the dollar interest rate is 4 percent, the euro interest rate is 6

If the dollar interest rate is 4 percent, the euro interest rate is 6 percent, then A) an investor should invest only in dollars. B) an investor should invest only in euros. C) an investor should be indifferent between dollars and euros. D) invest only in dollars if the exchange rate is expected to remain […]

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Date: September 10th, 2020

How does the two-good, two-country version of the Ricardian model diff

How does the two-good, two-country version of the Ricardian model differ from the two-country, many-good model in terms of the determination which goods are produced and exported by each country? What will be an ideal response?   ANSWER In the two-good-two-country version of the Ricardian model, comparative advantage is totally determined by physical productivity ratios. […]

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Date: September 10th, 2020