Explain the relationship between net exports and net foreign investment
What will be an ideal response?
Net exports equal net foreign investment. If net exports are negative, the people of the country will sell assets and borrow (negative foreign investment) to pay for the surplus of imports over exports. If net exports are positive, the people of the country will buy assets and lend (positive foreign investment).
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What are the effects of a financial crisis on short-run aggregate supply? How might long-run aggregate supply be affected?
What will be an ideal response?
The indifference curves of two investors are plotted against a single budget line. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B's tangency to the same line
A) Investors A and B are equally risk averse. B) Investor A is more risk averse than investor B. C) Investor A is less risk averse than investor B. D) It is not possible to say anything about the risk aversion of the two investors, but they will hold the same portfolio. E) It is not possible to say anything about either the risk aversion or the portfolio of the two investors.
Refer to the above figure. A price ceiling of $20 results in
A) a shortage of 100 units. B) a shortage of 200 units. C) a surplus of 100 units. D) a surplus of 200 units.
Daniel notices that every year with a mild winter, his roses begin to bloom in February, but every year with a severe winter, his roses do not begin to bloom until April. He concludes that the severity of the winter is responsible for the month in which his roses begin to bloom. Daniel is
A. probably misguided in that there is no apparent correlation or causation in this situation. B. very probably correct in his conclusion that the severity of the winter is a cause of when his roses begin to bloom. C. definitely confusing correlation with causation. D. likely correct that there is causation, but the causation is more likely running in the opposite direction in that the initial blooming of his roses is the cause of the severity of the previous winter.