Anybody Mind Helping Me With a Little Macroeconomics

Its been years since I've touched this stuff, but here goes nothing.

I'm still not sure how the money supply/money demand diagram helps out on this problem. So I'll just assume it doesnt



I posted the diagram because I cant think of any other way to explain this. If you look at the diagram, when the supply of the agriculture declined, it forced the supply curve to shift to the left. When that shifted, the new equilibrium point created had a higher price and lower quantity demanded as shown in the graph.

You should be able to go from there to answer your questions.

 

That sounds more like microeconomics...

 

Easy stuff. I mean surely there has to be more to it than that because the question is fairly broad. sorry for doing a half ass job but i have 2 tests tomorrow..

first draw your equilibrium (the supply for money is going to be a vertical line) and then draw the demand which is downward sloping as usual. if NX>0 then you have a trade surplus and are a net lender; the net capital outflows.

but of course you need scenarios. so lets say government (world variable - expansionary fiscal policy abroad) increases. if this happens the world interest rate increases so just move the equilibrium up to R*. just go up the supply line and then move it over to the left. then go to the the demand which is the interest rate....and inbetween the two lines is the trade surplus. Now this is in a small open economy.

then you have to do the same thing for the world financial market. because this is closed, you are not going to see a movement along the line rather an entire decrease in teh supply curve. so move it over to the left some. but again, both instances will show an increase in teh interest rate so you will have an incrase in spending and a trade surplus.

just play around with the different policies.

but just to make it clear : when the real interest rate goes up, NX will decrease because US goods become more expensive and imports will incease. Its an inverse relationship.

Something your teacher might like is a protectionist trade policy. this is like banning imports of a certain good (NX<0)

imports go down
net exports go up
shift the NX to the right
Real exchange rate goes up but NX stays the same

since nominal goes up
real exchange goes up
and imports rise

this offsets the effect of the ban, however you are worse off because the volume of the trade is reduced. NX=EX-IM; so say 5+20-15 (volume is 35) but then do 5=15-10 (same exports but the volume is reduced)

there are different ways to play around with this

sorry i couldnt go into more detail

hope you do well

 

Damn, I'm going to start posting all my homework problems in threads. I need some cyber-tutors.

 

lol

economics is one of my majors so i'm pretty sure i got it down by now

 

There's no way the problem is this complex. I see how currency diagram comes into play because the rise in imports necessary to compensate for declined production would shift the money demand curve but the questions he posted are too simple to require any analysis of the impact on global currency markets.

I'm just not sure how he could apply all of the stuff you said into those specific questions.

 

That's what I thought it was. See my first post.

 

anyone wanna do my aplia for microeconomics?

please.

 

Like I said, your question was too broad. What market are we in?

But yeah both of us said the same thing. supply will shift to the left, price will increase, demand will fall, and you have a net export

simple as that...

 

BOO on Aplia! omg that was such a beeeeootch!

 

lol i had to do all that aplia crap for micro last summer at uh. i had like 4-5 ch worth of aplia to do per week...it sucked quite a lot.

 

What the hell is aplia? And I have a degree in Economics.

 

It's a web based homework program where you have to plot points and answer questions just like any other homework assignment except I found it much more annoying than a typical homework assignment. I think they introduced Aplia maybe 4-5 years ago or so... so maybe you've never heard of it.