A Macroeconomic Theory OF The Open Economy
Two Approaches There are two well known approaches to pricing under perfect competition, partial equilibrium approach and the general equilibrium approach.first in set by Alfred Marshall and the second by Walrus. We have already discussed partial Equilibrium and...
A Macroeconomic Theory OF The Open Economy
COULD CAPITAL FLEE FROM THE UNITED STATES The us. economy has long been viewed as a safe economy in which to invest. Historical examples of capital flight usually occur in less developed nations, which are more likely to follow policies that induce sudden fear among...
A Macroeconomic Theory OF The Open Economy
The Effects of Capital Flight If people decide that Mexico is a risky place to keep their savings, they will move their capital to safer havens such as the United States, resulting in an increase in Mexican net capital outflow. Consequently, the demand for loan able...
A Macroeconomic Theory OF The Open Economy
POLITICAl INSTABILITY AND CAPITAL FLIGHT In 1994, political instability in Mexico, including the assassination of a prominent political world financial markets nervous. People began to view Mexico as a much less stable country than they had previously thought. They...
A Macroeconomic Theory OF The Open Economy
The Effects of an Import Quota When the U.S. government imposes a quota on the import of Japanese cars, nothing happens in the market for loan able funds in panel (a) or to net capital outflow in panel (b). The only effect is a rise in net exports (exports- minus...
A Macroeconomic Theory OF The Open Economy
TRADE POLICEY A trade policy is a government policy that directly influences the quantity of goods and services that a country imports or exports. Trade policy takes various forms. One common trade policy is a tariff, a tax on imported goods. Another is an import...
