Tutorial 12_2010 _answer_

Tutorial 12_2010 _answer_ - ECON1002 Introductory...

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ECON1002 Introductory Macroeconomics, S2 2010 Tutorial Tasks 1 R EADING G UIDE : BOF C HAPTERS 16 AND 17. Y OU SHOULD ALSO LOOK OVER YOUR LECTURES NOTES FOR W EEK 12. K EY C ONCEPTS : F IXED EXCHANGE RATE , F UNDAMENTAL V ALUE OF THE EXCHANGE RATE , SPECULATIVE ATTACKS , SAVING , INVESTMENT AND THE C URRENT ACCOUNT , CAPITAL FLOWS , T WIN D EFICITS H YPOTHESIS . P ROBLEMS N.B. Problems for student presentation: Problems 1 and 2. 1. Use a demand and supply diagram to illustrate the effects of a speculative attack on an overvalued exchange rate. See lecture note or textbook 2. Use a diagram to illustrate the effects of each of the following on the capital investment of a country that is a net borrower from abroad. a. Investment opportunities improve owing to new technologies. b. The government budget deficit rises. c. Domestic citizens decide to save more d. Foreign investors believe that the riskiness of lending to the country has increased. Study Figures on the NKI and S&I in the textbook. See lecture notes for details before you attempt this question. a. Shifts I curve to the right, raising the equilibrium real interest rate. b.
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This note was uploaded on 12/14/2010 for the course ECON 1002 taught by Professor Markmelatos during the Three '10 term at University of Sydney.

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Tutorial 12_2010 _answer_ - ECON1002 Introductory...

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