国际经济学第九版英文课后答案第17单元

InternationalEconomics–9thEdition

Instructor’sManual

*CHAPTER17

(CoreChapter)

THEINCOMEADJUSTMENTMECHANISMANDSYNTHESIS

OFAUTOMATICADJUSTMENTS

OUTLINE

17.1Introduction

17.2IncomeDeterminationinaClosedEconomy

17.2aDeterminationoftheEquilibriumNationalIncomeinaClosedEconomy

17.2bTheMultiplierinaClosedEconomy

17.3IncomeDeterminationinaSmallOpenEconomy

17.3aImportFunction

CaseStudy17-1:IncomeElasticityofImportsandExportsintheLeadingIndustrial

Countries

17.3bDeterminationofEquilibriumNationalIncomeinaSmallOpenEconomy

17.3cGraphicalDeterminationoftheEquilibriumNationalIncome

CaseStudy17-2:Savings,Investments,andtheCurrentAccountBalanceintheLeading

IndustrialNations

17.3dForeign-TradeMultiplier

17.4ForeignRepercussions

CaseStudy17-3:GrowthinUnitedStatesandAbroad,andU.S.CurrentAccount

Deficits

CaseStudy17-4:GrowthandCurrentAccountBalanceinDevelopingCountries

17.5AbsorptionApproach

CaseStudy17-5:EffectoftheAsianFinancialCrisisoftheLate1990sonOECD

Countries

17.6MonetaryAdjustmentsandSynthesisofAutomaticAdjustments

17.6aMonetaryAdjustments

17.6bSynthesisofAutomaticAdjustments

CaseStudy17-6:InterdependenceintheWorldEconomy

17.6cDisadvantagesofAutomaticAdjustments

Appendix:

KeyTerms

A17.1DerivationofForeignTradeMultiplierswithForeignRepercussions

A17.2TheTransferProblemOnceAgain

Closedeconomy

Importfunction

Equilibriumlevelofnationalincome(YE)

Desiredorplannedinvestment

Marginalpropensitytoimport(MPM)

Averagepropensitytoimport(MPM)

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Marginalpropensitytoconsume(MPC)

Consumptionfunction

Savingfunction

Marginalpropensitytosave(MPS)

Investmentfunction

Incomeelasticityofimports(ny)

Exportfunction

Foreigntrademultiplier(k')

Foreignrepercussions

Absorptionapproach

Multiplier(k)

Synthesisofautomaticadjustments

LectureGuide:

1.

2.

InthefirstlectureonChapter17(acorechapter),Iwouldcoversections1and2and

assignproblems1to4.Section2isareviewofprinciplesofeconomicsbutmy

experienceisthattheaveragestudentneedsittoclearlyunderstandthematerialinthe

restofthechapter.

Inthesecondlecture,Iwouldcoversections3and4andassignproblems3to8.Most

othertextsdonotdealwithforeigntrademultipliersinanygreatdetailbecauseofthe

difficultyofderivingthem.However,theirmeaninganduseisimportantandtheycans

stillbediscussedwithoutderivingthem(theirderivationisinsectionA17.1ofthe

appendix,whichcanbemadeoptionalforthebestandmosteagerstudentsintheclass).

3.

Inthethirdlecture,Iwouldcoversections5and6andassignproblems9to14.These

twosectionsareveryimportantanddifficult.

AnswertoProblems:

SeeFigure1onthenextpage.

1.

TheequilibriumlevelofnationalincomeisY=1,000andisgivenbypointEatwhich

E

theC+Ifunctioncrossesthe45°line.

2.a.S=-100+0.2Y.

Thesavingfunctionisobtainedbysubtractingverticallytheconsumptionfunctionfrom

the45˚line

b.SeeFigure2.

TheequilibriumlevelofnationalincomeisY=1,000andisgivenbypointEatwhich

E

thepositively-slopedSfunctioncrossesthehorizontalIfunction.

3.

SeeFigure3.

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ThenewequilibriumlevelofnationalincomeisY=1,500andisgivenbypointE'at

E

whichthenewC+I'functioncrossesthe45°line.

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4.a.SeeFigure4onthenextpage.

ThenewequilibriumlevelofnationalincomeisY=1,500andisgivenbypointE'at

E

whichtheSfunctioncrossesthenewI'function.

b.k=1/MPS=1/(1/5)=5.

5.a.S(Y)+M(Y)=-100+0.2Y+150+0.2Y=50+0.4Y

I+X=100+350=450

50+0.4Y=450;therefore,Y=400/0.4=1000.

E

b.SeeFigure5.

TheequilibriumlevelofnationalincomeisY=1,000andisgivenbypointEatwhich

E

thepositively-slopedS+MfunctioncrossesthehorizontalI+Xfunction.

6.

SeeFigure6.

TheequilibriumlevelofnationalincomeisY=1,000andisgivenbypointEatwhich

E

thenegatively-slopedX-Mfunctioncrossesthepositively-slopedS-Ifunction.

7.a.I+X'=100+350+200=650

50+0.4Y=650;

therefore,Y'=1500

E

AtY'=1500,M=150+0.2Y=150+(0.2)(1500)=450

E

X'-M=550-450=100

SeeFigure7onpage155.

b.I'+X=650

Y'=1500

E

X-M=350-450=-100

SeeFigure8.

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c.

X'+I'=550+300=850

50+0.4Y=850

therefore,Y"=2000

E

AtY"=2000,M=150+0.2Y=150+(0.2)(2000)=550

E

X'-M=550-550=0

SeeFigure9onpage155.

8.a.S'(Y)+M(Y)=-200+0.2Y+150+0.2Y=-50+0.4Y

I+X=100+350=450

-50+0.4Y=450

therefore,Y'=1250

E

AtY'=1250,M=150+0.2Y=150+(0.2)(1250)=400

E

X-M=350-400=-50S

SeeFigure10onpage157.

b.S(Y)+M'(Y)=-100+0.2Y+50+0.2Y=-50+0.4Y

-50+0.4Y=450

therefore,Y'=1,250

E

atY'=1250,M'=50+0.2Y=50+(0.2)(1,250)=300

E

X-M'=350-300=50(seeFigure11).

c.S'(Y)+M'(Y)=-200+0.2Y+50+0.2Y=-150+0.4Y

-150+0.4Y=450

therefore,Y"=1500

E

atY"=1500,M'=50+0.2Y=50+(0.2)(1500)=350

E

X-M'=350-350=0(seeFigure12).

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9.a.

K"=

1

=

1

=

1

=1.88

MPS1+MPM1+MPM2(MPS1/MPS2)0.20+0.20+0.10(0.20/0.15)0.533

YE=(X)(k")=(200)(1.88)=376

M=(YE)(MPM1)=(376)(0.20)=75.2

S=(YE)(MPS1)=(376)(0.20)=75.2

X=S+M=75.2+75.2=150.4sothat

X-M=75.2=Nation1'stradesurplus.

b.

k*=

1+MPM2/MPS2

=

1+0.10/0.15

0.533

=1.667=3.13

MPS1+MPM1+MPM2(MPS1/MPS2)

0.533

YE=(I)(k*)=(200)(3.13)=626

M=(YE)(MPM1)=(626)(0.20)=125.2

S=(YE)(MPS1)=(626)(0.20)=125.2

200+X=125.2+125.2

andX=50.4sothat

X-M=50.4-125.2=-74.8

10.

k**=

MPM2/MPS2

=

0.10/0.15

=0.67=1.25

MPS1+MPM1+MPM2(MPS1/MPS2)

0.533

0.533

YE=(I*)(k**)(200)(1.25)=250

M=(YE)(MPM1)=(250)(0.20)=50=S

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X=S+M=100

X-M=5

11.

k**=

0.5=0.95

0.53

YE=(I*)(k**)=(200)(0.95)=190

M=(YE)(MPM1)=(190)(0.15)=28.5=S

X=S+M=57

X-M=28.5

12.

TheX-MfunctionwouldshiftupasinFigure9withoutfullemployment.Withfull

employment,thedepreciationwillresultininflationandareturntotheconditionof

Figure8(i.e.,theX-Mfunctionwouldshiftupandthendowntoitsoriginalposition),

unlessdomesticabsorptionissomehowreduced.

13.

14.

Onereasonisthatthegovernmentsectorisnotincluded.Anotherreasonisifthenation

isnotinequilibrium.

Theadvantagesofautomaticoverpolicyadjustmenttocorrectatradedisequilibriumare:

(1)adjustmentbeginstooperateevenbeforetheproblemisrecognized;(2)thereareno

possibilitiesofpolicymistakes;and(3)theadjustmentwillcontinueuntilthetrade

disequilibriumisentirelyeliminated.Ontheotherhand,adjustmentpoliciescanonlybe

enactedaftertheproblemisrecognized.Therearethendelaystoenactpoliciesandfor

themtohaveeffect.Thus,bythetimeadjustmentpoliciesbecomeeffectivethenation

maynotlongerfacetheproblemormayfacetheoppositeproblem.Wrongpoliciescan

alsobeadopted.

App.1a.

I+m*Y*=sY+mY

I*+mY=s*Y*+m*Y*

X+m*Y*=sY-mY

-X+mY=(s*+m*)Y*

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-X+mY=Y*

s*+m*

X+m*(-X+mY)=sY+mY

s*+m*

X+-m*X+m*mY=(s+m)Y

s*+m+

s*X+m*X-m*X+m*mY=(s+m)(s*+m*)Y

s*X+m*mY=(s+m)(s*+m*)Y

s*X=[(s+m)(s*+m*)-m*m]Y

X=[

Y

]

s*

Y=

s*

=1

Xss*+mm*+ms*+m*s-m*ms+m+m*s/s*

b.k"=

1

s+m

thatis,k"isalreadyaforeignrepercussion.

App.2.Mostpetroleumexportingnations,notablySaudiArabia,Libya,andKuwaitcouldnot

spendalloftheirpetroleumearningsonincreasedimportsfrompetroleumimporting

countriesduringthe1970s.Mostunspentearningswereusedforportfoliopurchasesin

thedevelopednations,especiallyintheU.S.,throughtheEurodollarmarket.Atthesame

time,mostoil-importingnationsdeflatedtheireconomiestoreducetheiroilbilland

balanceofpaymentsdifficulties.Thesharpdeclineinpetroleumsince1981completely

eliminatedtheexcessearningsofmostOPECnationssothatthetransferproblem

disappeared.

Multiple-choiceQuestions:

1.Inordertoisolatetheincomeadjustmentmechanism,weassumethat:

a.thenationoperatesunderafixedexchangeratesystem

b.allprices,wages,andinterestratesareconstant

c.thenationoperatesatlessthanfullemployment

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*d.alloftheabove

2.Themarginalpropensitytoconsumemeasures:

a.theratioofimportstoincome

b.theratioofincometoimports

*c.thechangeinimportsoverthechangeinincome

d.thechangeinincomeoverthechangeinimports

3.Theincomeelasticityofimportsisgivenby:

a.thepercentagechangeinincomeoverthepercentagechangeinimports

b.thechangeinimportsoverthechangeinincome

*c.themarginalpropensitytoimportovertheaveragepropensitytoimport

d.theaveragepropensitytoimportoverthemarginalpropensitytoimport

4.Theequilibriumlevelofnationalincomeinanopeneconomyisgivenby:

a.I+X=S+M

b.X-M=S-I

c.I+(X-M)=S

*d.alloftheabove

5.IfMPS=0.2andMPM=0.3,theforeigntrademultiplieris:

a.5

b.3.3

c.3

*d.2

6.WhenSexceedsI,anopeneconomyhasatradebalance:

*a.surplus

b.deficit

c.equilibrium

d.anyoftheabove

7.TheS-Ifunctionrisesbecause:

a.risingIaresubtractedfromconstantS

*b.constantIaresubtractedfromrisingS

c.risingIaresubtractedfromrisingS

d.constantIareaddedtofallingS

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8.AnautonomousfallinMfromaconditionofequilibriuminnationalincomeandinthe

tradebalanceresultsinthenation'sincome:

a.risinganditstradebalanceturningtodeficit

b.fallinganditstradebalanceturningintosurplus

*c.risinganditstradebalanceturningintosurplus

d.risingandthetradebalanceremaininginequilibrium

9.AnautonomousincreaseinSfromaconditionofequilibriuminnationalincomeandinthe

tradebalanceresultsinthenation'sincome:

a.risinganditstradebalanceturningintosurplus

*b.fallinganditstradebalanceturningintosurplus

c.fallinganditstradebalanceturningintodeficit

d.risinganditstradebalanceturningintodeficit

10.Theforeigntrademultiplierofnation1islargest:

a.whentherearenoforeignrepercussions

b.withforeignrepercussionsforanautonomousincreaseinnation1'sXthatreplacedomestic

productioninnation2

*c.withforeignrepercussionsforanautonomousincreaseinIinnation1

d.withforeignrepercussionsforanautonomousincreaseinIinnation2

11.Byitself,theautomaticincomeadjustmentmechanismislikelytobringabout:

*a.incompleteadjustment

b.completeadjustment

c.perverseadjustment

d.anyoftheabove

12.Adepreciationofadeficitnation'scurrencyfromacon