The current account is
A) the reserve assets created by the International Monetary Fund for countries to use in settling international payment obligations.
B) the price of one nation's currency in term of the currency of another country.
C) a category of the balance of payments transactions that measures flows of real and financial assets.
D) a category of the balance of payments transactions that measures the exchange of merchandise, the exchange of services, and unilateral transfers.
Answer: D
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In the circular flow model, money flows from the business sector to the household sector through the:
a. product market. b. capital market. c. goods market. d. services market. e. resource market.
Okun's law shows that when the unemployment rate is below the natural rate,
A) inflation is higher than expected. B) inflation is lower than expected. C) output is below potential. D) output is above potential.
The River Rouge plant was built by the Ford Motor Company in the 1920s to produce the company's Model A car. Which of the following is evidence that the River Rouge plant suffered from diseconomies of scale?
A) Model A cars made at the River Rouge plant failed to earn a profit. Ford reduced the average cost of the Model A by cutting its employees' wages. B) Model A cars made at the River Rouge plant failed to earn Ford a profit. Ford eventually constructed smaller plants to make the Model A at a lower average cost. C) Model A cars made at the River Rouge plant failed to earn a profit because the price of steel used to manufacture the Model A rose when workers in the steel industry went on strike. D) Despite an expensive advertising campaign the Model A did not earn the company a profit.
Using the DD-AA framework, show the phenomenon of overshooting. Use a figure to explain when it is taking place
What will be an ideal response?