How did the United States become a net debtor in the 1980s? Is our foreign debt a significant problem? Explain
What will be an ideal response?
In the 1980s, the United States ran large current account deficits, which had to be financed by net foreign borrowing. But the foreign debt doesn't represent a significant problem because it remains small relative to our GDP and because it is mostly in the form of portfolio investment rather than direct investment. But it is worrisome that the increased foreign debt hasn't been accompanied by a rise in our capital stock.
You might also like to view...
Which of the following brings only an increase in the quantity demanded of a good?
A) a decrease in income, assuming the good is an inferior good B) a rise in the price of a substitute good C) a fall in the price of the good itself D) an expectation that the good's price will rise in the future E) a decrease in income, assuming the good is a normal good
Which of the following is included in M1, but not in M2?
A) currency B) checking account deposits C) travelers checks D) Everything in M1 is in M2.
If an increase in inflation is expected, which of the following events is the least likely to occur?
a. There will be an upward movement along the long-run Phillips curve. b. Nominal GDP will increase. c. Nominal wage rates will increase at the same rate as expected inflation. d. A worker's reservation wage will rise at the same rate as expected inflation. e. Unemployment rate will increase.
What is another name for a vertical line that shows the long-run aggregate supply in the aggregate demand and aggregate supply model?
a. Real GDP b. Equilibrium GDP c. Potential GDP d. Long-run aggregate demand