In goods market equilibrium in an open economy,
A. the desired amount of exports must equal the desired amount of imports less the amount lent abroad.
B. the desired amount of national saving must equal the desired amount of domestic investment.
C. the desired amount of national saving must equal the desired amount of domestic investment plus the current account balance.
D. the desired amount of exports must equal the desired amount of imports.
Answer: C
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The idea that a tax cut will create an incentive for people to increase their quantity of labor supplied, which will shift aggregate supply to the right and that will lower the price level and increase real GDP, is held by the
a. rational expectations school b. school of supply-side economics c. neo-Keynesian school d. classical school e. Keynesian school
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
In the United States, consumers, businesses, governments, and foreigners participate in both the product and factor markets.
Answer the following statement true (T) or false (F)
The equilibrium wage rate in an industry is determined by
A) finding where the market supply curve indicates that the substitution effect and income effect of a wage increase are offsetting. B) the intersection of the market demand curve for labor and the market supply curve for labor. C) the strength of the substitution effect relative to the elasticity of demand for labor. D) whether workers or management are better at negotiating.