All your Writing needs covered

Pakistan’s GDP is $230 billion per year, and Pakistan’s interest rate is constant at 10%. In year 1 Pakistan is hit by a strong earthquake which…

Calculate the price
of
your order:

275 words
+
Approximate price
$ 0.00

Pakistan’s GDP is $230 billion per year, and Pakistan’s interest rate is constant at 10%. In year 1 Pakistan is hit by a strong earthquake which…

Pakistan’s GDP is $230 billion per year, and Pakistan’s interest rate is constant at 10%. In year 1 Pakistan is hit by a strong earthquake which causes its GDP to drop this year to only $120 billion. Income will recover back to $230 billion in all subsequent years. Assume Pakistan consumers aim to perfectly smooth consumption across all future years, and are able to borrow at an interest rate of 10% from foreigners. 

a) (3 points) What will the path of Pakistan’s Consumption(C) in the year of the earthquake and subsequent years. Complete the corresponding row of the table.

(b) (3 points) What will the path of Pakistan’s Trade Balance(TB) in the year of the earthquake and subsequent years. Complete the corresponding row of the table.

(c) (3 points) What will the path of Pakistan’s Net Factor Income from Abroad(NFIA) in the year of the earthquake and subsequent years. Complete the corresponding row of the table. 

(d) (3 points) What will the path of Pakistan’s Financial Account(FA) in the year of the earthquake and subsequent years. Complete the corresponding row of the table.

(e) (3 points) In the year after the earthquake(year 2) Pakistan discovers massive shale gas deposits offshore. Accessing the shale gas will require an investment of $15 billion. If exploited, on current projections of gas prices, the gas deposits could yield an income of $2 billion a year indefinitely, beginning in the year following the investment. Would it be profitable for Pakistani firms to invest in developing the gas fields? Explain Why 

a) At 10% interest rate,Investment 0.1 X 230 = 23 millionIn equilibrium Investment = SavingsConsumption = GDP ­ Savings= $207billionb) Trade balance will be = GDP ­ Consumption extra…

Basic features

  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support

On-demand options

  • Writer's samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading

Paper format

  • 275 words per page
  • 12pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, CHicago/Turabian, Havard)

Guaranteed originality

We guarantee 0% plagiarism! Our orders are custom made from scratch. Our team is dedicated to providing you academic papers with zero traces of plagiarism.

Affordable prices

We know how hard it is to pay the bills while being in college, which is why our rates are extremely affordable and within your budget. You will not find any other company that provides the same quality of work for such affordable prices.

Best experts

Our writer are the crème de la crème of the essay writing industry. They are highly qualified in their field of expertise and have extensive experience when it comes to research papers, term essays or any other academic assignment that you may be given!

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00

Expert paper writers are just a few clicks away

Place an order in 3 easy steps. Takes less than 5 mins.

error: Content is protected !!
Open chat
1
Reliance Papers Inc.
Get Help With All Your Homework Questions. Any Deadline, Affordable, Quality Work Guaranteed!!