A British investor buys $40,000 worth of stocks in the U.S. stock market. For the U.S. we can predict ________.
A. if the capital account is unchanged, the current account must decrease in value
B. there will be no effect on either the current account or the capital account
C. the sum of the current account and the capital account must increase
D. if the current account is unchanged, the capital account must increase in value
Answer: A
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Under the initial Bretton Woods system,
a. foreign currencies could be converted into U.S. dollars, which could be redeemed for gold at a rate determined by supply and demand b. foreign currencies could be converted into U.S. dollars, which could be redeemed for gold at a rate of $35 per ounce c. foreign currencies could be converted into gold at a rate determined by supply and demand d. foreign currencies could be converted into gold at a rate of $35 per ounce e. gold was the international medium of exchange
Externalities are fundamentally the result of
a. the absence of competition in a market. b. the lack of well-defined or enforced property rights. c. poor information on the part of consumers. d. the presence of significant comparative advantages in production.
Which of the following adjustments will most likely occur when output exceeds the economy's long-run capacity?
a. Prices will decline, bringing actual output into balance with its potential. b. The natural rate of unemployment will increase and, thereby, restore equilibrium. c. Higher resource prices and costs will reduce short-run aggregate supply until output falls to the economy's long-run capacity. d. Lower interest rates will increase the economy's long-run capacity and restore equilibrium.