ECMC61_Assignment_1_%28Summer_2010%29 - ECMC61 LEC 01 and...

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ECMC61 – LEC 01 and LEC 02 International Economic: Finance Assignment 1 Due: On or before Thursday, June 10, 2010, 1:00pm, MW 376 (Note: Assignment submitted after 1:00pm June 10 WILL NOT BE accepted under ANY circumstance.) Instructions: You can submit individual or group assignment. If you submit group assignment, there should be NO MORE THAN FIVE students in your group and you just have to submit ONE copy. WORK WITH STUDENTS BELONGING TO THE SAME GROUP ONLY. A title page MUST be attached with your assignment; it MUST include your name(s), student number(s), and your lecture section(s). Staple your assignment (Paper clip is not accepted). A PENALTY OF 10% OF THE TOTAL MARKS WILL BE IMPOSED IF YOU DO NOT HAVE A TITLE PAGE OR STAPLE YOUR ASSIGNEMNT. No late assignment will be accepted. Label your graph; otherwise, marks will be subtracted. Do not write E/q/E e increases/decreases ( / ) in your answer, you have to answer whether the currency appreciates/depreciates. POINTS WILL BE SUBTRACTED IF YOU DO NOT FOLLOW THIS INSTRUCTION . No credit will be given if you do not show your work. Your answer should be structured in a way such that those know little about economics will have no difficulty in understanding your argument/answer. Total marks: 100 points. Question 1 (20 points) The world consists of three countries, X, Y, and Z, only. Table 1 (on page 2) provides some macroeconomic data for these three countries. Additional information about these countries: Country-specific information: Country X: The government collects one-third ( ) of the country’s income as taxes and it runs a budget surplus of 450. The sales of goods and services abroad represent 30% of the level of production, and half of the sales go to Y. It has a balanced balance of payments. Country Y: The government runs budget deficit of 280. The central bank sells 428 worth of foreign assets. Y has a current account deficit of 60 with X. ECMC61 Assignment 1 (Summer 2010) 1
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The amount of financial assets purchased by the residents of Y from the residents of X reaches 545, while the amount of financial assets purchased from the residents of Z is 1000. Y’s residents receive asset transfers of 75 and 50 from residents of X and Z respectively. No market transactions are involved in these transfers. In addition, these are the only asset transfers among these three countries. Country Z: The country allocates 17% of its output to build up (physical) capital stock. It runs a balanced trade with X. The country’s stock of official reserves increases by 428. Its residents sell 375 worth of financial assets to X’s residents.
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This note was uploaded on 02/05/2011 for the course ECM 61 taught by Professor Jackparkinson during the Summer '10 term at University of Toronto- Toronto.

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ECMC61_Assignment_1_%28Summer_2010%29 - ECMC61 LEC 01 and...

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