AB 204 Unit 8 Assignment
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assignment
1. Long-run Macroeconomic Equilibrium and Stock Market Boom
Let us assume the economy reaches its long-run macroeconomic
equilibrium in 2020. When the economy is in the long run
macroeconomic equilibrium, the stock market will also reach its boom.
This will in turn lead to increases in stock prices more than expected,
and the stock prices will stay high for some period.
2) Studies indicate that net exports and net capital outflows tend to be
equal.
a) Why do net exports and net capital outflows tend to be equal? How
does an increase in the price level change interest rates?
b) How does this change in interest rates lead to changes in investment
and net exports?