Assume the government reduces government spending. What is the first round effect on the components of the balance of payments (assume low international capital mobility and fixed exchange rates; also assume that before the government action all the components were 0)?
a. Current international transactions balance and reserves account become positive; net nonreserve international
borrowing/lending balance becomes negative.
b. Current international transactions balance becomes positive; net nonreserve international borrowing/lending balance and reserves account become negative.
c. Net nonreserve international borrowing/lending balance becomes positive; current international transactions balance and reserves account becomes negative.
d. Net nonreserve international borrowing/lending balance and reserves account become positive; current international transactions balance becomes negative.
e. Reserves account becomes positive; current international transactions balance and net nonreserve international borrowing/lending balance become negative.
.B
You might also like to view...
The economic way of thinking assumes
A) people act selfishly. B) people act altruistically. C) people act to promote the projects in which they are interested. D) people do not act at all; they merely react to the environment around them.
If the price of beef rose and the demand for chicken increased, then beef and chicken are:
a. Substitute goods b. Consumer goods c. Inferior goods d. Complementary goods
The manner in which one oligopolist reacts to a change in price, output, or quantity on the part of another oligopolist in the industry is known as
A) a positive-sum game. B) the reaction function. C) a noncooperative game. D) a zero-sum game.
A transfer payment is
A. an in kind payment for working "off the books." B. a bonus to get a worker to accept a transfer. C. a cash payment for transferring a good from one person to another. D. a cash payment made by the government to people who do not supply goods, services or labor in exchange for the payment.