Suppose That the Large Industrial Countries of the World Are

question 123

Essay

Suppose that the large industrial countries of the world are concerned about the depreciating currencies of a number of small open economies. a. What type of fiscal policies must the large industrial countries undertake in order to promote currency appreciation in the small open economies?
b. Illustrate graphically the impact of the industrial countries' policies on the exchange rate of the small open economies.
c. What will happen to the trade balance of the typical small open economy, assuming that it starts from a position of balanced trade?

---

Definitions:

Capital Deepening

An increase in the amount of capital per worker, which typically leads to higher productivity.

Output Per Capita

The average production of goods or services per person within a given community or economy.

Industrialized Country

A nation with a relatively high level of industrial activity, characterized by significant manufacturing output and modern infrastructure.

Female Population

The segment of a population that identifies as female, potentially considered in demographic studies, social policies, and economic analyses.