Author Question: Suppose that businesses in Japan reduce their spending on plant and equipment. What will be the ... (Read 102 times)

dmcintosh

  • Hero Member
  • *****
  • Posts: 517
Suppose that businesses in Japan reduce their spending on plant and equipment. What will be the effect on spending on plant and equipment by businesses in the United States?
 
  What will be an ideal response?

Question 2

In the DMP model, a decrease in matching efficiency
 
  A) has no effect on vacancies.
  B) reduces the unemployment rate.
  C) increases labor market tightness.
  D) increases the size of the labor force.



Swizqar

  • Sr. Member
  • ****
  • Posts: 357
Answer to Question 1

Because Japan is a large open economy, the decrease in the demand for loanable funds in Japan will lower the world real interest rate. At a lower real interest rate, businesses in the United States will increase their spending on plant and equipment. Note that this answer ignores the potentially offsetting effect operating through the impact of lower spending on plant and equipment in Japan on Japanese national income and on Japanese demand for goods and services produced in the United States.

Answer to Question 2

D



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

During pregnancy, a woman is more likely to experience bleeding gums and nosebleeds caused by hormonal changes that increase blood flow to the mouth and nose.

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Did you know?

It is important to read food labels and choose foods with low cholesterol and saturated trans fat. You should limit saturated fat to no higher than 6% of daily calories.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

For a complete list of videos, visit our video library