Explain what economists mean when they say that the United States is a net debtor nation. Identify a potential problem and a positive aspect associated with this status.
What will be an ideal response?
The United States is a net debtor nation because foreigners own more U.S. assets (e.g., stocks, bonds, and property) than U.S. citizens own abroad. A potential problem associated with this status might occur if foreign investors decide to sell their U.S. assets. This would cause a serious devaluation of the dollar and resultant problems in the domestic economy (e.g., inflation). On the other hand, the fact that investment in the United States is attractive to foreigners is an indication of foreign confidence in the U.S. economy. This investment also increases our economic growth potential.
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Average variable cost:
a. first tends to decrease, and then increase as output expands. b. remains unchanged as output expands c. always increases as output increases. d. always decreases as output expands.
Which of the following would be an economic explanation of how "99ยข pricing" was developed?
a. It was a sales gimmick that sellers used to try to fool their customers. b. It was encouraged by a penny newspaper to increase the number of pennies in circulation. c. It was a scheme to let firms advertise that their prices were under some round dollar figure. d. It was a way of ensuring that sales were recorded on cash registers, thus reducing employee theft.
Hillary and Bill are playing backgammon. Hillary offers to place a wager on the game's outcome at fair odds. Bill is risk-averse and believes that he has a 60% chance of winning the game. When will Bill accept the wager?
a. Always. b. When the wager is sufficiently small. c. When the wager is sufficiently large. d. Never.
In the United States, the money supply (M1) consists of:
A. paper currency and coins. B. coins, paper currency and checkable deposits. C. paper currency, coins, checkable deposits, and savings deposits. D. government bonds, currency, and checkable deposits.