Assuming no change in the effective tax rate on capital, a decrease in the government budget deficit will reduce the current account deficit if and only if the decrease in the budget deficit
A. reduces desired national saving.
B. increases desired national investment.
C. increases desired national saving.
D. reduces desired national investment.
Answer: C
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Assume that a one-year Malaysian bond yields 10 percent interest and that the dollar return on maturity is 5 percent. If the exchange rate at maturity is $1 = MYR 4.00 (Malaysian ringgit), what was the exchange rate at the time the bond was purchased?
a. $1 = MYR 4.2 b. $1 = MYR 3.8 c. $1 = MYR 3.6 d. MYR 1 = $0.26 e. MYR 1 = $0.4
On a bank's T-account, which are part of the banks liabilities?
a. both deposits made by its customers and reserves b. deposits made by its customers but not reserves c. reserves but not deposits made by its customers d. neither deposits made by its customers nor reserves
All opportunity costs are
a. Nonmonetary b. Forgone monetary payments c. Losses of time d. Values of alternatives that must be given up e. Related to educational opportunities
The government might provide a subsidy when
A) a negative externality exists. B) an effluent fee has been unsuccessful. C) it wants to increase the amount of a good consumed. D) it wants to transform a negative externality into a positive externality.