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Unformatted text preview: news is that the increase in output and income will lead domestic consumers to buy more imported goods, and our current account balance will fall. Analyze this statement, taking as given that a beneficial productivity shock has indeed occurred. 4. What will happen to the exchange rate and net export in each of the following cases? (a) The foreign real interest rate falls (b) Foreign output falls (c) Foreign demand for domestic goods falls (d) Domestic output falls (e) The domestic real interest rate falls...
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- Spring '07
- J Liu