7. (10 pts) One unofficial objective of President Trump is to undo all of President. Obama's...

 

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7. (10 pts) One unofficial objective of President Trump is to undo all of President. Obama's accomplishments. One of President Obama's signature policies was an investment tax credit on environmentally safe investments like solar energy projects, super-efficient furnaces, etc. Assume that President Trump rescinds this investment tax credit and makes those investments more expensive, what is the expected impact of rescinding this fiscal policy on nominal interest rates in the United States (use the model of loanable funds)? (Assume this will result in a reduction in the demand for national investments). (5 pts) Using the elimination of investment tax credit example in problem 7. above, assume the United States primarily trades with China, what is the expected impact to the Chinese Yuan - U.S. exchange rate (E), holding everything else constant (e.g. will the Dollar appreciate, depreciate, or retain the same value against the Yuan?). (5 pts) If you are managing a business that exports and imports primarily to and from China, what are your expectations for exports to China after deregulations? (5 pts) What are your expectations for imports after deregulations? You must show all work for any credit. 7. (10 pts) One unofficial objective of President Trump is to undo all of President. Obama's accomplishments. One of President Obama's signature policies was an investment tax credit on environmentally safe investments like solar energy projects, super-efficient furnaces, etc. Assume that President Trump rescinds this investment tax credit and makes those investments more expensive, what is the expected impact of rescinding this fiscal policy on nominal interest rates in the United States (use the model of loanable funds)? (Assume this will result in a reduction in the demand for national investments). (5 pts) Using the elimination of investment tax credit example in problem 7. above, assume the United States primarily trades with China, what is the expected impact to the Chinese Yuan - U.S. exchange rate (E), holding everything else constant (e.g. will the Dollar appreciate, depreciate, or retain the same value against the Yuan?). (5 pts) If you are managing a business that exports and imports primarily to and from China, what are your expectations for exports to China after deregulations? (5 pts) What are your expectations for imports after deregulations? You must show all work for any credit.

Answer rating: 100% (QA)

Rescinding the investment tax credit on environmentally safe investments would lead to a reduction in the demand for national investments This reducti... View the full answer