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International Economics Assignment

Question # 00019575
Subject: Economics
Due on: 07/10/2014
Posted On: 07/10/2014 05:20 AM

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Please ensure that the word count of your report does not exceed 1,750 words excluding tables, diagrams, statistical information, references.

SECTION A (Total 35 marks)

Question 2

Log on to the SIM Library e-Resources, and access the latest reports (and earlier reports if necessary) on United States, under the Economist Intelligence Unit (EIU) Country Report. Answer the following questions related to international balance of payments.

(a) Describe the government budget status and the international balance of paymentstatus of the United States. If a country is running a government budget deficit,explain if such a deficit will contribute to a current account deficit.

(5 marks)

(b) The U.S. current account deficit is largely attributed to the widening trade deficit with China. Discuss the major factors that contribute to the trade imbalance between these two countries.

(10 marks)

(c) Identify and analyse the measures that have been taken by policymakers in bothcountries to correct their trade imbalance.

(5 marks)

Question 3

Log on to the SIM Library e-Resources, Economic Intelligence Unit (EIU) Country Reports and access the latest issue of report on Malaysia.

(a) Discuss the current account balance of Malaysia and its holdings of international reserves over the period from 2007 to 2012, and explain the reasons leading to this trend.

(5 marks)

(b) Discuss the advantages and disadvantages to Malaysia of having large current account surpluses.

(5 marks)

(c) Describe the current exchange-rate regime that is adopted by the Malaysian central bank. Discuss the advantages and disadvantages of adopting this regime?

(5 marks)

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International Economics Assignment Solution Paper

Tutorial # 00019007
Posted On: 07/10/2014 05:21 AM
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Tutorial Preview …signing xx Mid xxxx Loan Agreement xx Sovereign Based xxxxxxxxx Cooperation xxxxx xxx executed xx Exlm bank xx both the xxxxxxxxx 3a xx xxxx the xxx of Malaysia xxx 6 4% xxxxx was xxx xxxxxx surplus xx last 15 xxxxx The reason xxxxxx this xxx xxxxxxx was xxxx growth in xxxxxxx as compared xx imports xxx xxxxxx of xxxxxxx government and xxx BOP’s current xxxxxxx were xx xxx opposite xxxxxxxxx The current xxxxxxx balance of xxxxxxxx sustained xxxxxxxxxx xxxxxxx for xxxx fifteen years xxxxx 1998 The xx surplus xxxxxx xxxx period xxx mainly due xx surplus of xxxxxxxxxxx trade xxxx xxxxx the xxxxxxxxx global crisis xxxxx were current xxxxxxx surplus xxx xxxxxxxxx although xx witnessed declining xxxxx from 17 xx GDP xx xxxx to xx 1% in xxxx while in xxxx it xxx xxx The xxxx 2102 had x very sharp xxxx in xx xxxxxxx which xxx 6 4% xx GDP Sluggish xxxxxx was xxx xxxx reason xxxxxx this sharp xxxx The rise xx the xxxxxx xx import xxx 5 9% xx 2012 The xxxxxxx reserves xx xxxxxxxx reached x very high xxxxx of US$139 xxx for xxx xxxx end xxxx It was xxxx higher than xxxxxx 3bn xx xxx end xx year 2007 xxx international reserves xx the xxx xx year xxxx are sufficient xxxxxx to finance xxx short-term xxxxxxxx xxxx of x 2 times xxx retained imports xxx 9 x xxxxxx The xxxx in the xxxxxx of GDP xx one xx xxx reasons xxx increase in xxxxxxx reserves Economic xxxx is xxx xx the xxxxxxx for increase xx reserves as xxxx in xxx xxxxx to xxxxxxxxxxxx of reserves xxx sustained and xxxxxxxxxx inflow xx xxxxxxx capital xxx international reserves xxxxxx to be x strong xxxxxxx xxx the xxxxxxx account weakness x The surplus xx the xx xxxxxxx is x signal of xxxxxx economy The xxxxx current xxxxxxx xxxxxxx indicates xxxx it is xxxxxxxxx more than xxxxxxxxx goods xxx xxxxxxxx This xxxxx to increase xx the international xxxxxxxx which xxxxx xx used xx purchase foreign xxxxxx like government xxxxx The xxxxx xxxxxxx of xx helps Malaysia xx be more xxxxxxxxxxx…
International_Economics_Solution_Paper.docx (45.95 KB)
Preview: Mid xxxx Loan xxxxxxxxx of Sovereign xxxxx Financing Cooperation xxxxx was xxxxxxxx xx Exlm xxxx of both xxx countries 3a xx 2012 xxx xxx of xxxxxxxx was 6 xx which was xxx lowest xxxxxxx xx last xx years The xxxxxx behind this xxx surplus xxx xxxx growth xx exports as xxxxxxxx to imports xxx budget xx xxxxxxx government xxx the BOP’s xxxxxxx account were xx the xxxxxxxx xxxxxxxxx The xxxxxxx account balance xx Malaysia sustained xxxxxxxxxx surplus xxx xxxx fifteen xxxxx since 1998 xxx CA surplus xxxxxx this xxxxxx xxx mainly xxx to surplus xx merchandise trade xxxx after xxx xxxxxxxxx global xxxxxx there were xxxxxxx account surplus xxx Malaysia, xxxxxxxx xx witnessed xxxxxxxxx trend from xx 1% GDP xx 2008 xx xx 1% xx 2010 while xx 2011 it xxx 11% xxx xxxx 2102 xxx a very xxxxx fall in xx surplus xxxxx xxx 6 xx of GDP xxxxxxxx export was xxx main xxxxxx xxxxxx this xxxxx fall The xxxx in the xxxxxx of xxxxxx xxx 5 xx in 2012 xxx foreign reserves xx Malaysia xxxxxxx x very xxxx level of xxxxxx 7bn for xxx year xxx xxxx It xxx much higher xxxx US$101 3bn xx the xxx xx year xxxx The international xxxxxxxx at the xxx of xxxx xxxx are xxxxxxxxxx enough to xxxxxxx the short-term xxxxxxxx debt xx x 2 xxxxx and retained xxxxxxx for 9 x months xxx xxxx in xxx growth of xxx is one xx the xxxxxxx xxx increase xx foreign reserves xxxxxxxx size is xxx of xxx xxxxxxx for xxxxxxxx in reserves xx rise in xxx leads xx xxxxxxxxxxxx of xxxxxxxx The sustained xxx continuous inflow xx private xxxxxxx xxx international xxxxxxxx proves to xx a strong xxxxxxx for xxx xxxxxxx account xxxxxxxx b The xxxxxxx in the xx balance xx x signal xx strong economy xxx large current xxxxxxx surplus xxxxxxxxx xxxx it xx exporting more xxxx importing goods xxx services xxxx xxxxx to xxxxxxxx in the xxxxxxxxxxxxx currency which xxxxx be xxxx xx purchase xxxxxxx assets like xxxxxxxxxx bonds The xxxxx surplus xx xx helps xxxxxxxx to.....
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