When the flow of money from the foreign countries to the domestic firms equals the flow of money from the home country to the foreign firms, _____
a. a trade surplus exists
b. an equal amount of agricultural and manufactured products are exported
c. a trade deficit exists
d. an equal amount of goods and services are imported
e. the value of net exports is zero
e
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The economy is at the equilibrium shown as point a in the above figure. To restore the economy to potential GDP, the Fed should
A) buy government securities and thereby increase aggregate supply. B) sell government securities and thereby decrease aggregate demand. C) buy government securities and thereby decrease aggregate demand. D) buy government securities and thereby increase aggregate demand. E) sell government securities and thereby increase aggregate demand.
Assume Qs represents the quantity supplied at a given price and Qd represents the quantity demanded at the same given price. Which of the following market conditions produce a downward movement of the price?
a. Qs = 1,000, Qd = 750 b. Qs = 750, Qd = 750. c. Qs = 750, Qd = 1,000 d. Qs = 1,000, Qd = 1,000.
The Federal Reserve is the U.S. government's bank. Identify the functions the Fed performs in this role.
What will be an ideal response?
“In the last four months, GDP has been declining and many sectors have shown a contraction in business activity. Still, employment has remained constant. We are currently in a recession.” Evaluate this statement.
What will be an ideal response?