Long-run effects of rise in safe-haven capital inflow
Course:- Business Economics
Reference No.:- EM13891935

Assignment Help
Assignment Help >> Business Economics

In the five years ending 2011, Switzerland enjoyed a fiscal surplus that averaged 1.3% of GDP, a trade surplus that averaged 2.6% of GDP, and a government debt to GDP ratio that averaged 40%. With the Eurozone economies rocked by a destabilizing sovereign debt crisis, investors over the world consider Switzerland as a safe-haven and increase their purchases of Swiss assets. Assume Switzerland is a small open economy and its consumption demand is a function of disposable income only. Use the appropriate graphs for a small open economy to illustrate and explain the theoretical long-run effects of the rise in “safe-haven” capital inflow into Switzerland on each of the following: Switzerland’s national savings, investment, net capital outflow, net exports, and the real exchange rate of the Swiss franc.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Find clear vision's profit maximizing output and price; also determine profit. suppose that box city imposes a specific tax of t=1$ per unit of service. find clear vision's ne
The first national bank received 3,000 inquiries following the latest advertisement decribing its 30-month IRA accounts in the Boston World, a local newspaper. The most recent
How is it that higher tax rate can increase tax revenue in some cases, but a higher tax rate can decrease tax revenue in other cases? Relate this to the price elasticity of de
Suppose that you are considering the purchase of a security that has the following timeline of payments: How much would you be willing to pay for this security if he market in
An electronics firm invested $60,000 in a precision inspection device. It cost $4000 to operate and maintain in the first year and $3000 in each of the subsequent years. At th
Suppose the "Effective Rate of Protection" for Brazilian automobile producers is calculated to be - 60% (negative 60 percent). This result indicates that. A small country that
Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, illustrate what was the real
For each one of the costs below, explain whether the resource cost is explicit or implicit, and give the annual opportunity cost for each one. Assume the owner of the business