Chapter 9 Formulas and Definitions All symbols are as in the…
Chapter 9 Formulas and Definitions All symbols are as in the textbook and lectures. CA + FA = 0, ignoring KA, and except for the statistical discrepancy GDP = C + I + G + X – M GNP = GDP + net primary income + net secondary income GNP = C + I + G + CA S + (T – G) = I + CA ********************************* Information for questions 8-9 Consider the following hypothetical information on the National Income and Product Accounts for Indonesia. The amounts are in billions of dollars, but ignore the “billions” part, that is, just treat the numbers as whole numbers in dollars. Assume that the Statistical Discrepancy is 0. Indonesia’s Capital Account is 0. For all questions, enter a whole number of the appropriate sign. Enter 0 if the answer cannot be obtained with the information given. Only exact answer is accepted, so double check your calculations. The answers may be positive or negative, make sure to enter the right sign. Calculate Indonesia’s financial account balance.
Read DetailsChapter 10 Formulas and Definitions All symbols are as in th…
Chapter 10 Formulas and Definitions All symbols are as in the textbook and lectures. Unless otherwise stated, you can assume that two countries have purchasing power parity (PPP) and interest rate parity. Exchange rate when there is PPP: R = P / P*. In this formula, P and P* can be regarded as prices of individual goods or of consumption baskets. Approximate relationship when there is interest rate parity: i – i* = (F – R)/R. For the purpose of this test, take this equation to be exact, not approximate. You can also use the equivalent equation i – i* = F/R – 1. For this formula to work, i and i* must be fractional, not percentages. So, a domestic interest rate of 1.34% is written i=1.0134, a foreign interest rate of 22.5% is written i*=1.225. Note that you may be asked to enter answers as percentages, though. ***************************** Suppose that a ticket to the U.S. Open in tennis costs $100, and a ticket for Wimbledon costs £78 (78 British pounds). If the two tickets cost the same, what is the exchange rate? Enter the exchange rate in the usual unit, that is, $/£ (dollars per pound), not £/$ (pounds per dollar). Only answers approximately within 1% are accepted, so double check your calculations, and enter a decimal number, rounding to the third decimal digit.
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