Texts what are the effects of each of the following on the...

Texts: What are the effects of each of the following on the U.S. international investment position? a. Foreign central banks increase their official holdings of U.S. government securities. b. U.S. residents increase their holdings of stocks issued by Japanese companies. c. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. 2. On December 31, a country has the following stocks of international assets and liabilities to foreigners. The country’s residents own $30 billion of bonds issued by foreign governments. The country’s central bank holds $20 billion of gold and $15 billion of foreign currency assets as official reserve assets. Foreign firms have invested in production facilities in the country, with the value of their investments currently $40 billion. Residents of foreign countries own $25 billion of bonds issued by the country’s companies. a. What is the value of the country’s international investment position? Is the country an international creditor or debtor? b. If the country runs a surplus in its current account during the next year, what will be the impact on the value of the country’s international investment position?

Transcript

00:01 So let's analyze how each of the scenario will affect the value of the currency of jerry land related to the us dollar first one us inflation has suddenly increased substantially while inflation in jerry land remains same when us inflation rise significantly while jerry land inflation remains low, it implies that the purchasing power of us dollar has increased related to the jerry of which this could lead to a depreciation of the us dollar against that area because the terry of values remains relatively stable due to low inflation people my good part of all serious causing an increasing demand for serious and then decreasing demand for us dollar leading to an appreciation of the arterial and forbid a real interest rate and increase interest rate us low in jerry land high real interest rate in the us can attract foreign investor looking for better return on their investment this could lead to an increased demand for the us dollar causing it to appreciate related to that cereal meanwhile, jerry of low real interest rate may make it less effective for foreign investment producing demand for the terry of embassy us income level increase and jerry income remains unchanged change again an increasing us income level can stimulate greater consumer spending and investment which may lead to increase import from terry and this increase demand from terry land goods and services may require more jerry of leading to appreciation of the terry of related to the us dollar 140 us is expected to impose all small terry on good import us impose motory on good imported from every land the involution of the terry by the us and german food will likely reduce the volume of import from jerry land to the us this can lead to a decrease in my portfolio as terry land may earn few dollars from export as a result that cereal may depreciate related to the us dollar this is for the first question and the second to develop an overall forecasting of the terry of movement against the us.

03:51 So you need to consider that cumulative effect of this scenario first thing cereal is likely to appreciate if you have been patient right of the theory why serious inflation remains real and the can is periodic shake the cereal may depreciate if we are in charge right significantly increase it because we want a real real interest rate remains real and serious could appreciate if the us income level increase substantially leading to high demand for surveillance goods and services and for the top that a real major appreciate if the us imposes a tariff on jerry lansing for future demand for the wheels the net effect will depend on the relative magnitude of this factor...

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