Instructions:
1. When Analyzing graphs, please use the following instructions as a guide:
a. Graphs are required for all questions that ask for graphs to be plotted. Once the graph is prepared, you need to copy it and paste it in the word document where your comments and responses will be written. One way to copy the graph is to do a print screen by displaying the graph on your monitor and pressing on the print screen button labeled as (Prt Scr/Sys Rq) on your keyboard. Once you hit the button, past the graph in a word document where the responses to the questions are written.
b. It is good practice to start the analysis of a graph by stating the variable being analyzed and the period of observation for the analysis.
c. Provide a brief statement about the general trend of the lines on the graph.
d. Comment on any specific and unusual features of the graph. For example, sudden and steep rises and falls must be noted and possible reasons for the change must be offered.
e. Changes in the variables during recessionary periods must also be noted.
2. Refrain from searching for the responses to the questions on the internet (you will be wasting time unnecessarily). Information needed to answer practically all the questions in this course can be found either on the graphs and or in the required text.
Note: Please use January 1960 to date as the period of observation for all analysis, unless otherwise stated.
This week’s lessons provide an introduction to open- economy macroeconomics. It discusses among others, the key macroeconomic variables that describe an open economy’s interactions in world markets. Chapter 13 will examine among others, variables such as, exports, imports, the trade balance, and exchange rates and the next and chapter 14 will develop a model to explain how these variables are determined and how they are affected by various government policies.
1. On a multi-series graph, plot the following:
a. Plot the level of Real Exports of Goods and Services (FRED code: EXPGSC96) to cover the period 1960 to present.
b. Save the Graph
c. Open the graph saved in part 1b. On the same graph plot Real Imports of Goods and Services (FRED code: IMPGSC96).
d. Copy and paste graph in part 1c in a word document where you will answer the question in part 1e.
e. Comment on the performance of U.S exports and Imports over the period of observation and provide reasons, as discussed in your text, for the significant increase in U.S International trade over the past several decades.
2. Define Net Exports and Net Capital Outflow. Explain how they are related.
3. Describe supply and demand in the market for loanable funds and the market for foreign- currency exchange. How are these markets linked?
4. In the model of the open economy developed in the text, two markets determine two relative prices. What are the markets? What are the two relative prices?
5. Provide a brief discussion of the policies and events that influence the economy’s equilibrium. (Hint: The transmission mechanism of these policy actions and events must work through Supply and Demand in the Market for Loanable Funds and the Market for Foreign-Currency exchange.
Remember to cite all sources. Your instructor may take ADDITIONAL points off for spelling, grammar, punctuation, citation errors and due dates at his or her discretion. See grading rubric for details.