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Unformatted text preview: ASSIGNMENT # 4 ECON 201 VARUN GOEL TRU ID 100109186 CH-15 7 ) Exports and manufacturing companies may have their profits battered. The rise of the dollar would make these companies products expensive to foreigners and thus contributing to decline in their exports. Growth of sales is directly proportional to the companys capital spending. Negative growth sales (decline in exports) would thus slice into their capital spending. 9 ) A weak trade figure (negative net exports) would (also increase balance of payments deficit) increase the demand of dollar sought in open market among foreign investors and thus lowering the value of dollar. Higher interest rates (in strong economy) are used to bring down the aggregate demand of goods and services and to fight inflation (Due to price level increases) and also for attracting higher foreign investments (capital account surplus). The balance of trade deficit is being compensated by capital account surplus (Higher interest rates inducing capital investments) N1 ) Balance of payments = the payments that flow between any individual country = 1000000 - ($10000*100) = 0 or unchanged....
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This note was uploaded on 12/27/2009 for the course ECE Coen 243 taught by Professor Drlajam during the Winter '07 term at Concordia Canada.
- Winter '07