The purchase of a U.S. asset by a foreign resident is a
A) surplus item on the current account. B) deficit item on the financial account.
C) surplus item on the financial account. D) deficit item on the current account.
C
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The interest rate that commercial banks charge each other for very short-term loans is called the ________.
A. federal funds rate B. prime rate C. commercial paper rate D. Federal Reserve discount rate
In a perfectly competitive market, the driving force behind long-run economic change is
a. government intervention b. employment c. economic profit or loss d. management e. altruism
As the level of real interest rates rise, the amount of new investment will rise also.
Answer the following statement true (T) or false (F)
Under free trade, a large country produces one million leather bags per year and imports another two million bags per year at the world price of $60 per bag. Assume the country imposes a specific tariff of $5 per bag. As a result, the per-unit price of leather bags decreases to $58 in the international market and the import of leather bags drops to 1.6 million. The domestic production, on the other hand, increases to 1.1 million. As a result of the tariff being imposed
A. the country gains national well-being because the amount of the tariff revenue effectively paid by the exporters more than offsets the consumption and the production effects. B. the country loses national well-being because the government revenue from the tariff is insufficient to compensate for the losses arising from the production and consumption effects. C. the country gains national well-being because the tariff increases domestic production. D. the country loses national well-being because the tariff hurts the domestic consumers.