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Figure 132

Question 46

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Figure 13.2.Australian Economy Under a Fixed Exchange Rate System -Refer to Figure 13.2.Starting at equilibrium income $50 billion,where (S-I)0 intersects (X-M)0,suppose that improving profit expectations lead to an autonomous increase in Australian investment of $5 billion.Australian income thus ____ which leads to Australia's trade account moving to a ____.

Figure 13.2.Australian Economy Under a Fixed Exchange Rate System
Figure 13.2.Australian Economy Under a Fixed Exchange Rate System -Refer to Figure 13.2.Starting at equilibrium income $50 billion,where (S-I) 0 intersects (X-M) 0,suppose that improving profit expectations lead to an autonomous increase in Australian investment of $5 billion.Australian income thus ____ which leads to Australia's trade account moving to a ____. A) Rises to $60 billion,deficit of $2.5 billion B) Rises to $60 billion,deficit of $5 billion C) Falls to $40 billion,surplus of $2.5 billion D) Falls to $40 billion,surplus of $5 billion
-Refer to Figure 13.2.Starting at equilibrium income $50 billion,where (S-I) 0 intersects (X-M) 0,suppose that improving profit expectations lead to an autonomous increase in Australian investment of $5 billion.Australian income thus ____ which leads to Australia's trade account moving to a ____.


A) Rises to $60 billion,deficit of $2.5 billion
B) Rises to $60 billion,deficit of $5 billion
C) Falls to $40 billion,surplus of $2.5 billion
D) Falls to $40 billion,surplus of $5 billion

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