a.Identify and explain the three driving forces of the most recent period of glo
ID: 1109207 • Letter: A
Question
a.Identify and explain the three driving forces of the most recent period of globalization.
b. Explain the J-Curve
c. Explain how dollar depreciation can change the price of a foreign input.
d. Explain how higher real interest rates in the United States can affect the price level and real GDP.
e. Why might it be easier to recognize the costs of globalization than the benefits?
f. If globalization continues over the next few decades, how might your life be different?
g. How might governments impact globalization?
h. What effect might advancing technology have on globalization?
i. Some have argued that the end of the Cold War acted as a catalyst toward greater globalization. How so?
j. David Friedman said that free (international) trade is a technology. Explain what he means.
k. Will globalization lead to some people losing jobs?
l. How do tariff rates in the United States today compare with 1946?
m. Assume a two-country world where the two countries are the United States and Japan. Note the impact on U.S. Real GDP of each of the following: (a) A fall in the real interest rate in the United States relative to the real interest rate in Japan. (b) An economic expansion in Japan.
n. If Americans buy fewer units of good X, which is produced in Japan, will they necessarily spend less money overall on Good X? Explain your answer.
o.“The discussion of the J-curve points out that economists sometimes think in terms of both the short run and the long run.” Do you agree or disagree? Explain your answer.
p.Explain how a change in the exchange rate can change both the U.S. AD and SRAS curves.
q. Suppose country A undertakes a policy mix of contractionary fiscal policy and expansionary monetary policy. What would you predict would happen to real interest rates, the value of country A’s currency, and net exports? Explain your answer.
r. Explain why expansionary monetary policy is more likely to increase Real GDP in an open economy than in a closed economy.
s, Why might import spending rise in a country soon after a depreciation of its currency? Is import spending likely to fall over time? Explain your answers.
t. Explain why contractionary monetary policy lowers Real GDP more in an open economy than in a closed economy.
Explanation / Answer
Three driving forces of globalisation of most recent period are 1, Technology 2,Trade Flow and 3, liberalisation.
Technology : technologycal up gradation make economy more faster and easy and aslo more chipper than past. It bring hole world in our home and break all geographical barrier, make hole world a single market.
Trade Flow: more liberal trade policy and and over the year removal of trade barriers has facilitated a rising growth of the world trade.
Liberalisation :after the introduction of of World Trade Organisation , world trade policy become more liberal and same trade policy teken by all countries, also unilateral negotiationas and decision teken by the countries world over.
b. When a country's trade balance is in deficit position, the country may take devaluation policy that is, lowering the value of one currency in terms of another currency. The expansion in exportsand retardation of importants are expected to improve the tread deficit. Since this pattern of movement of the trade balance over time subsequent to devaluation resembles the latter J, economist have termed it the J carve .
C. If the dollars deprecated the purchesing power of dollars fall and it value fall in respect of other countrys currency. Now if USA want to purchase foreign input after dollar depression USA have to pay more dollar than before dollar depression because purchasing power of dollar fall , so input become more costly than before.
D.higher real interest rates decrease the inflation rates at the same time it decrease the employment of the country that pull down the production of the country or output , so GDP will fall, and price level will also fall.
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