Solutions for Macroeconomics, 16th Canadian Edition by McConnell (All Chapters included)
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Course
Macroeconomics 101
Institution
Macroeconomics 101
Complete Solutions Manual for Macroeconomics, 16th Canadian Edition by Campbell McConnell, Stanley Brue, Sean Flynn, Tom Barbiero ; ISBN13: 9781260881356.....(Full Chapters included and organized in reverse order from Chapter 18 to 1)...CHAPTER 1: Limits, Alternatives, and Choices
CHAPTER 2: The M...
Macroeconomics, 16th Canadian
Edition by Campbell McConnell
Complete Chapter Solutions Manual
are included (Ch 1 to 18)
** Immediate Download
** Swift Response
** All Chapters included
** ABA Teaching Notes
,Table of Contents are given below
CHAPTER 1: Limits, Alternatives, and Choices
CHAPTER 2: The Market System and the Circular Flow
CHAPTER 3: Demand, Supply, and Market Equilibrium
CHAPTER 4: Market Failures Caused by Externalities and Asymmetric Information
CHAPTER 5: Public Goods, Public Choice, and Government Failure
CHAPTER 6: An Introduction to Macroeconomics
CHAPTER 7: Measuring the Economy’s Output
CHAPTER 8: Economic Growth
CHAPTER 9: Business Cycles, Unemployment, and Inflation
CHAPTER 10: Basic Macroeconomic Relationships
CHAPTER 11: The Aggregate Expenditures Model
CHAPTER 12: Aggregate Demand and Aggregate Supply
CHAPTER 13: Fiscal Policy, Deficits, Surpluses, and Debt
CHAPTER 14: Money, Banking, and Money Creation
CHAPTER 15: Interest Rates and Monetary Policy
CHAPTER 15B: Financial Economics
CHAPTER 16: Long-Run Macroeconomic Adjustments
CHAPTER 16B: Current Issues in Macro Theory and Policy
CHAPTER 17: International Trade
CHAPTER 18: The Balance of Payments and Exchange Rates
CHAPTER 18B: The Economics of Developing Countries
,Solutions Manual organized in reverse order, with the last chapter
displayed first, to ensure that all chapters are included in this document.
(Complete Chapters included Ch18-1)
Chapter 18 - The Balance of Payments, Exchange Rates, and Trade Deficits
McConnell Brue Flynn Barbiero 16ce
DISCUSSION QUESTIONS
1. Do all international financial transactions necessarily involve exchanging one currency for
another? Explain. Could a nation that neither imports nor exports goods and services still
engage in international financial transactions? LO18.1
Answer: The answer is almost certainly a yes. Only in rare cases would you find barter
exchanges (goods and services for other goods and services). Yes, they could engage in
financial transactions (the exchange of assets across countries).
2. Canadian exports earn supplies of foreign currencies that Canadians can use to finance
imports. Indicate whether each of the following creates a demand for or a supply of European
euros in foreign exchange markets: LO18.1
a. A Canadian airline firm buys several Airbus planes assembled in France.
b. A German automobile firm decides to build an assembly plant in Halifax.
c. A Canadian university student decides to spend a year studying at the Sorbonne in Paris.
d. An Italian manufacturer ships machinery from one Italian port to another on a Liberian
freighter.
e. The Canadian economy grows faster than the French economy.
f. A Canadian government bond held by a Spanish citizen matures and the loan amount is
paid back to that person.
g. It is widely expected that the euro will depreciate in the near future.
Answer: Canadian exports lead to an increase in the foreign-currency bank deposit holdings
of Canadians. These holdings will be decreased through Canadian purchases of imports.
Hence, the foreign-currency assets earned through exports can be used to finance imports.
a. A demand for euros: The Canadian airline must purchase euros before purchasing the
Airbus planes.
b. A supply of euros: The German automobile firm must purchase CANADIAN dollars, or
supply euros, before building the plant.
c. A demand for euros: The Canadian college student must purchase euros before studying
in France.
18-1
, Chapter 18 - The Balance of Payments, Exchange Rates, and Trade Deficits
d. A supply of euros: The Italian manufacturer must purchase Canadian dollars, or supply
euros, to pay the Liberian freighter (which requires payment in CANADIAN dollars).
e. A demand for euros: Since the Canadian economy grows faster than the French economy,
Canadian imports from France will grow faster than France's imports from Canada
holding everything else constant. To buy these additional French goods Canada will
purchase more (net) euros.
f. A demand for euros: Canada pays the Spanish citizen in Canadian dollars. The Spanish
citizen then purchases euros so she has currency she can use in her home country.
g. A supply of euros: Since individuals holding euros expect the currency to depreciate in
the near future they sell (supply) the euros today in an attempt to avoid the loss in the
future.
3. What do the plus signs and minus signs signify in the Canadian balance of payments
statement? Which of the following items appear in the current account and which appear in
the capital and financial account? (a) Canadian purchases of assets abroad; (b)Canadian
services imports; (c) Foreign purchases of assets in Canada; (d) Canadian good exports, (e)
Canadian net investment income. Why must the current account and the capital and financial
account sum to zero? LO18.2
Answer:
The net sales of official reserves in the foreign exchange market show up as a plus (+). The
plus sign (+) indicates a credit to Canada’s balance of payments. The negative sign (-)
indicates a debit to Canada’s balance of payments.
a. Canadian purchases of assets abroad: current account
b. Canadian services imports: current account
c. Foreign purchases of assets in Canada: capital and financial account
d. Canadian good exports: current account
e. Canadian net investment income: current account
The balance on the current account and the balance on the capital and financial account must
always sum to zero because any deficit or surplus in the current account automatically creates
an offsetting entry in the capital and financial account. People can only trade one of two
things with each other: currently produced goods and services or preexisting assets.
Therefore, if trading partners have an imbalance in their trade of currently produced goods
and services, the only way to make up for that imbalance is with a net transfer of assets from
one party to the other.
18-2
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