When current account deficits are used to finance investment spending, such deficits may be self-correcting because
A) they promote more responsible government policies.
B) the resulting increase in the capital stock over time shifts the output supply curve to the right.
C) the resulting increase in the capital stock over time shifts the output demand curve to the right.
D) the resulting increase in national indebtedness increases labor demand.
B
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Constant returns to scale means that as all inputs are increased
A) total output remains constant. B) average total cost rises. C) average total cost rises at the same rate as do the inputs. D) total output increases in the same proportion as do the inputs.
If the required reserve ratio is 20 percent and the Fed buys a $10,000 security from a depository institution that currently has no excess reserves, the money supply: a. decreases by $10,000. b. increases by $5,000
c. decreases by $5,000. d. increases by $50,000. e. decreases by $50,000.
In a monopolistically competitive market, if price is greater than average cost:
A. firms will enter. B. firms will exit. C. there will be no change in the number of firms. D. the market is in long-run equilibrium.
Present value is
A) the value of a future amount expressed in today's dollars. B) the value of a dollar received a year from now, expressed in terms of its future value. C) the inverse of the interest rate. D) the nominal value instead of the real value of something.