What are the main components of the current account? What has been the recent U.S. experience with these items?
What will be an ideal response?
The current account records payments for the imported of goods and services and the receipts for exported of goods and services. These two components of the current account are by far the largest components. In addition to the value of imports and exports, the current account also includes the net interest income paid abroad and net transfers. Net interest income measures the interest payments both made and received which flow from previously purchased assets. Net transfers record such items as foreign aid payments.
Over recent years, the U.S. current account has been negative, that is, there has been a current account deficit. Over these years, the United States has experienced a perennial trade deficit, which means that the value of imports has exceeded the value of exports. The trade deficit has been the primary cause why the U.S. current account has been negative. Net interest income has been barely negative while net transfers are also negative and slightly larger in magnitude than net interest income.
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Which of the following scenarios best demonstrates Say's law?
A. Nandini plays the piano at a restaurant, and her income is based solely on voluntary donations. She never lets her demand for goods and services determine how long she plays the piano. B. Professor Mackowski teaches economics at a university and receives a monthly paycheck. Each month he spends half his paycheck and saves the rest in his piggy bank under his bed. C. Farmer Perk grows strawberries on his farm. As he grows them, he decides to buy more goods if he sells more strawberries than he expected.
If a public good was left to be provided by the private sector
A) more than the efficient quantity would be produced. B) less than the efficient quantity would be produced C) the efficient quantity would be produced D) the good would be provided at a very low price.
Price discrimination can benefit some consumers when
a. the additional profit realized by the monopolist equals the cost incurred b. the government comes in to regulate the market c. competitors are also able to price discriminate d. those consumers pay a price lower than the price they would have to pay a single-price monopolist e. those consumers pay a price higher than the price they would have to pay a single-price monopolist
PZX Corporation has the opportunity to undertake an investment project that will cost $10,000 today and yield the company $13,310 in 3 years. PZX will forgo the project if the interest rate is higher than 10 percent
a. True b. False Indicate whether the statement is true or false