When there are two large open economies, if desired international lending by the domestic country exceeds desired international borrowing by the foreign country, then
A) domestic saving must rise.
B) domestic saving must fall.
C) the world real interest rate must fall.
D) the world real interest rate must rise.
C
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Explain why economies with financial account surpluses usually have current account deficits
What will be an ideal response?
The country of Bienmundo does not trade with any other country. Its GDP is $30 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Bienmundo amounts to $5 billion. What are consumption and investment in Bienmundo?
a. $17 billion and $8 billion, respectively. b. $19 billion and $6 billion, respectively. c. $19 billion and $8 billion, respectively. d. $17 billion and $6 billion, respectively.
Your teacher decides to play a game where every student must contribute a dollar. All money collected is distributed at the end of the game among the students. This is an example of a
A) positive-sum game. B) zero-sum game. C) strategy. D) negative-sum game.
Cash may be preferred to food stamps because additional cash
A) rotates the budget constraint. B) shifts out the budget constraint at every point. C) provides a smaller opportunity set. D) allows the purchase of more food.