Potential benefits and potential costs

Assignment Help Business Economics
Reference no: EM131395573

Suppose a small, relatively poor country decides to pursue trade and financial sector liberalization, opening up its economy to international transactions with the rest of the world in goods, services, factor services and assets. Assume it will follow a fixed exchange rate regime.

a) What are the potential benefits and potential costs for this country of opening up to trade?

b) If you observed this country initially experience current account deficits and capital account surpluses when it opened up to trade, would you be surprised and why (or why not)? Under what conditions would the deficits be "sustainable"?

c) What would you expect to happen to the prices of tradable goods that the country produces relative to world prices, and of its assets, when it opens up to trade and why?d) Suppose that, initially upon opening up to trade, the country experiences a balance of payments deficit that is attributable to a current account deficit that is inadequately funded by foreign lenders. Why might foreign investors be wary of holding the assets of this country? How would this balance of payments deficit be funded? Explain carefully.

Reference no: EM131395573

Questions Cloud

High-alcohol content beer has enjoyed rapid growth : The demand for Joy's new high-alcohol content beer has enjoyed rapid growth recently. From the analysis of Joy's various outlets, it was found that the demand curve follows this pattern: Q J = 150 - 200 P J - 100 P C + 10 T - 150 A C + 250 A J whe..
Discuss diagnostic characteristics of personality disorder : In your paper, discuss the diagnostic characteristics of the personality disorder, the etiology of the disorder (the causes of the disorder, when it first manifests, etc.), and how the characteristics of the disorder have been linked to future cri..
Prepare the swot analysis of the organization and offering : Select a new product or service that will be launched by either an existing organization or one you will create. Obtain your instructor's approval of your product or service before beginning this project. Our service/product will be Grocery App (i..
Calculate the output that minimizes average cost : A firm faces the following demand and cost functions: P = 23 - 0.6q AVC = 3 + 0.4q AFC = 40q -1 (a) Calculate the output that minimizes Average Cost.
Potential benefits and potential costs : a) What are the potential benefits and potential costs for this country of opening up to trade? b) If you observed this country initially experience current account deficits and capital account surpluses when it opened up to trade, would you be su..
How educators can positively influence a school-age child : In 250 words discuss how educators can positively influence a school-age child to not hold biases or prejudices against others. Give an example of how a teacher can create a community of learners who support one another by fostering positive attit..
Dispute between karl and sergio : Determine whether the following disputes are verbal, factual, or some combination of the two. If verbal, discuss whether the dispute arises from vagueness or ambiguity.
Identify the important attributes for your chosen product : Identify the important attributes for your chosen product and select two key variables for your perceptual map.Prepare a perceptual map for your chosen product/brand and using a minimum of seven competitors, rank each product/brand on the two varia..
Aggregate expenditures and nominal gdp : Using the values in the table, calculate the following aggregate expenditures and nominal GDP. Instructions: Round your answers to 1 decimal place. Include a negative sign if necessary.

Reviews

Write a Review

Business Economics Questions & Answers

  Assumptions of the median voter model hold

“If the assumptions of the median voter model hold, then using majority voting to determine the amount of a public good purchased by a city will lead to either an efficient level of the public good being provided or an under-provision of the public g..

  Military personnel were stationed abroad

Some people believe that if no U.S. military personnel were stationed abroad, terrorists would have less desire to harm the United States and its citizens. Do you agree? Why or why not? 75 to 150 words only.

  Most advanced form of regional integration

Although European Union is the most advanced form of regional integration, it is currently facing a challenging time. What are some of the major challenges facing the EU?

  Expect depreciation of the currencies against the dollar

Currencies of some Latin American countries frequently weaken against most other currencies. What concept in this chapter accounts for this occurrence? Why don’t all U.S.-based MNCs use forward contracts to hedge their future remittances of funds fro..

  Ground level ozone shift the marginal cost of producing

Assume reductions in the amount of ground level ozone shift the marginal cost of producing alfalfa from MC1= 45 + 2QS to MC2= 45 + 0.5QS. Use the producer surplus to estimate the maximum amount alfalfa producers would be willing to pay for this impro..

  Canon needs to cover its expenses in japan

Canon will receive payment from its dealers on August 28th, 2012. Assuming which Canon needs to cover its expenses in Japan

  Probability that the debt for a borrower with good credit

For borrowers with good credit scores, the mean debt for revolving and installment accounts is $15,015. Assume the standard deviation is $3540 and that debt amounts are normally distributed. What is the probability that the debt for a borrower with g..

  Theory of poverty traps

As far as I can tell, research on the economics of poverty is very empirically driven, and this is probably appropriate. What kind of economic theory has been developed though? I'd also be interested in theory of some influence too. As an example, I ..

  The nash equilibrium will be

In a simultaneous move game, if both charge the low price (LP) they each earn $5K. If both charge the high price (HP) they each earn $10K. If they charge different prices, the one playing LP earns $15K and the other earns $1K. The Nash Equilibrium wi..

  Nonmonetary cost associated with purchasing car

Which of the following is a nonmonetary cost associated with purchasing a car? ___ are commonly determined by ranking people into higher or lower positions of respect.

  What will happen to the number of firms-the market supply

What will happen to the number of firms, the market supply, and the price of the good as we move from the short run to the long run?

  Elucidate how your consumption changes

Use a budget constraint and indifference curve to show and elucidate how your consumption changes.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd