Under a flexible exchange rate system, a nation that offers more attractive investment opportunities than its trading partners can expect to run a
a. surplus on current account transactions.
b. deficit on current account transactions.
c. balance of trade surplus.
d. capital account deficit.
B
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A particularly severe recession is called a(n):
A. lull. B. growth recession. C. depression. D. super recession.
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.
a. true b. false
The best measure of average income for a country is
A. Real GDP. B. The economic growth rate. C. Per capita GDP. D. The capital stock of the economy.