Question

QUESTIONS Suppose that the dollar amount of goods and services that Americans buy-that is import - in 2020 from all other countries will be the same as the amount that Americans bought from all other countries in 2019. Suppose further that in 2020 non-Americans will want to invest more in America than non-Americans invested in America in 2019. The result of the above two facts will be an American current account (or "trade) deficitin 2020 that is higher than the American current account deficit in 2019 an American current account (or "trade) deficit in 2020 that is lower than the American Current account deficit in 2019 an American capital-account surplus in 2020 that is higher than the American capital-account surplus in 2019 an American capital-account surplus in 2020 that is lower than the American capital account surplus in 2019 There is more than one correct answer among options a, b, c. and d. QUESTION 10 True or false: If America's current account deficit decreases that is, if the dollar amount of America's current account deficit gets smaller this fact implies that the American economy is becoming stronger. True O False QUESTION 11 The graph below depicts the market for figs. Government just imposed a price floor on figs at P per pound). The amount of figs that consumers will actually get with this price floor in place is Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Answer 1

Suestion a. We knows Current Account Balance = value of exports: -valie of iniports. In the above problem, me know that the dollar, amount of imports and in 2019 and 2020 are ! same but we don't know anything about the exports in these two years.

S t . Aniéricans in Jose without knowing the value of exports, not only, we will be unable to determine whether the wrrent account is in surplus or deficit, we cannot even compare the net result of the two years. Further, we have : Capital Account Balance = Receipt from sale of assets to foreigners. (ice, investment by foreigners in America) brania Spending on buying assets from 'foreigners (ire investment by. Americans in foreign countries). Only knowing the fact that in 2020 non- Americans will want to invest inore in America than they did in 2019, won't suffice, we need more information on the investments that Americans are going to make (or have made) abroad, so as to ascertain the status of capital- Allount. Heme, in this context ; the turr correct answer is There is more than one correct answer among options a, b, c, and a Even if we assume that the current account is in deficât and the capital account is in surlus, as suggested by the options provided and our knowledge of the fact that erren't - account detiet (surplus) is offsétted by capitat- account surplus (deficit, we will have the same answer, because, for comparison between 2019 and 2020, we need to have corresponding years' data]

Question 10: We know . . current Account Balance - value of Exports valine of Imports Thus, a deffect in current account means that, O Value of Imports > Value of Exports. i. A decrease in the deficit in errent account implies, either an increase in the value of exports or decrease in the value of imports or both and both of these contingencies contributes to economic growth sire, they imply that the cionomy is becoming stronger. Hence, the correct, option is i True [Note: There can be circumstances, when, due to economic slow down the value of imports decreases, ine, the Americans capability to spend on foreign : .goods decreases and that is why the current account deficit decreases as well. In that case, the above. statement can be false, and it is implied that, decrease in current account deficit doesn't always. lead to the conany becoming stronger,] .