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ASS#4_ECON201 - ASSIGNMENT#4 ECON201 VARUNGOELTRU...

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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 company’s 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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