(a)State how the following transactions would be recorded in Singapore’s’ Balance of payments. In your answer state the item, the relevant account, and whether it is a credit or a debit entry.
(i)A Singaporean resident purchases a dairy farm in New Zealand
(ii)A UK resident visits their relatives in Singapore and spends SGD 600 shopping on Orchard road.
(iii)An Australian resident purchases a factory in Malaysia from a Singaporean resident
(iv)A Singaporean company pays dividends to its Australian shareholders
(v)An Australian resident receives income for services rendered in Singapore
(b)
Review the table below:-
unit
Data S$m
Previous period
Balance of Payments
S$m
3,530.80
4,141.10
Current Account Balance
S$m
19,600.60
24,194.50
Exports of Goods and Services
S$m
224,918.40
220,269.20
Imports of Goods and Services
S$m
191,669.00
183,147.20
Primary Income Balance
S$m
-11,611.60
-10,716.50
Secondary Income Balance
S$m
-2,037.20
-2,211.00
Reserve Assets
S$m
3,530.80
4,141.10
Official Foreign Reserves
US$m
282,995.20
278,625.10
Net International Investment Position
S$m
1,207,120.5
Provide an economic assessment of the data presented. In your answer refer to the economic significance of the various accounts in the balance of payments, the role of the central bank, international net debt, changes in foreign investment and changes in trade flows, savings and investment differentials .
Question 2
In the context of National Income Accounting and the Intertemporal model: Consider a country “smartville” with a closed economy real rate of interest of 3% while the prevailing world interest rate is 1.5%.
(i)Use the metzler diagram as a framework to critically evaluate the likely outcomes for the “smartville” economy. In your answer refer to the current account balance, savings and investment, comparative advantage, and discuss how “smartville” might gain from opening up to trade with the rest of world in this context.
Question 3
Consider models of Exchange rate determination.
Assume interest parity holds and the return on a domestic asset is equal to the covered return on a foreign asset. In the domestic economy the central bank decreases the interest rate in order to stimulate the economy.
Using both covered and uncovered interest parity conditions identify the direction variables would be expected to move in response to the policy changes in order to restore parity. What role do expectations play if any in this process?
Question 4
Consider theories relating to exchange rate determination in the Long Run. The domestic central bank responds to the COVID 19 virus by increasing money supply via quantitative easing measures.
(a)Applying the Dornbusch’s sticky price model and assuming the exchange rate is not managed directly by the central bank, explain the implications of the central bank actions on the spot exchange rate (e)
(i)in the short run
(ii)in the long run
(b)Applying the monetary model, explain the implications of the central bank action on the spot exchange rate
(c)What are the key differences in the monetary and Dornbusch models of exchange rate determination?
Question 5
Consider the relationship between the exchange rate and the balance of payments. Examine the case of a small country in the import and export markets under the elasticity approach.
(a)Draw a separate graph for the import market and the export market illustrating the effect of a rise in e, on the foreign price of imports and exports and the quantities of imports and exports respectively.
(b)What can be determined about the effect on the trade balance from a rise in e as a result of your analysis in part (a).
(c)If there is less than 100% pass through how might this impact on import expenditure?
(d)Assume a small economy is below full employment. Illustrate and explain how a reduction in the value of the domestic currency (rise in e) will impact on the trade balance under the absorption approach.
(e)Consider how you might model the impact of the COVID19 virus on a small economy initially at full employment. Discuss likely outcomes using the absorption model.
Question 6
In the framework of the Swan model, assume that Singapore was achieving both internal and external balance, prior to the outbreak of COVID 19. Assume that Singapore faces a relatively inelastic IB schedule and a relatively elastic EB schedule.
(a)Illustrate a likely outcome of the COVID19 virus on both internal and external balance and mark Singapore’s current post virus position on a Swan Diagram as X.
(b)Briefly explain how and why an attempt to restore internal balance will disrupt external balance
(c)What automatic mechanisms may help restore internal balance? How effective might these mechanisms be in the current economic situation brought on by the Covid19 virus?
(d)Following the recommended policy assignment rules, what policies should be put in place to restore general macroeconomic equilibrium.
Question 7
With reference to the IS-LM-BP analysis of a small economy like Ireland, answer the following questions and provide the required explanation and diagrams.
(a)Assuming Ireland trades predominantly within the eurozone, has perfect capital mobility and a fixed exchange rate (Euro), examine the effect that an expansionary monetary policy put in place by the European central bank has for the domestic (Irish) economy.
(b)To counteract the negative effects of the COVID 19 virus on the domestic economy of a small open economy with a flexible exchange rate (such as New Zealand), would you recommend a fiscal or monetary policy response? Use the IS LM BP model to support your answer
Question 8
With reference to the IS-LM-BP analysis, answer the following questions and provide the required explanation and diagrams to support your analysis.
(a)Assume a country like the United Kingdom (UK) with high levels of capital mobility and a flexible exchange rate, puts in place an extensive expansionary monetary policy. Examine the likely effect that this policy has for the UK economy.
(b)How might an expansionary fiscal policy in UK spill over to a smaller trading partner (for example the republic of Ireland)? Illustrate and explain the macroeconomic interdependencies between the UK and Ireland. What other factors might impact the transmission of impacts between the two nations?
Question 9
Consider a country with a fixed exchange rate. Assume there is initially macroeconomic equilibrium, there is no flow of assets/ capital internationally i.e. zero capital mobility. Then the Government undertakes an expansionary fiscal policy.
(a)Illustrate the initial policy effect graphically.
(b)Due to the policy what is the resulting disequilibrium.
(c) What action does the central bank need to undertake to maintain the fixed exchange rate?
(d)What is the net effect on Y as a result of the monetary expansion?
The post Singaporean resident purchases a dairy farm in New Zealand appeared first on Homeworkaider.
What Students Are Saying About Us
.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐"Honestly, I was afraid to send my paper to you, but you proved you are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"
.......... Customer ID: 11***| Rating: ⭐⭐⭐⭐⭐
"This company is the best there is. They saved me so many times, I cannot even keep count. Now I recommend it to all my friends, and none of them have complained about it. The writers here are excellent."
"Order a custom Paper on Similar Assignment at essayfount.com! No Plagiarism! Enjoy 20% Discount!"
