How do balance of trade, balance on current account, and balance of payments differ?
What will be an ideal response?
Balance of trade refers to the difference between a nation’s merchandise exports and its merchandise imports over a given period of time. Balance on current account includes the balance of trade and also includes services, investment income, and unilateral transfers in addition to merchandise. Balance of payments includes all financial transactions between nations and is composed of the current account, the capital account, the settlement account, and the statistical discrepancy.
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Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent
If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent. A) 8; 6 B) 8; 2 C) 0; 1 D) 8; 4 E) 6; 2
Draw in a new demand curve, D1, on the graph, showing a decrease in demand What happens to price and quantity?
An increase in government spending will immediately shift
A. aggregate supply to the right. B. aggregate demand to the right. C. aggregate supply to the left. D. aggregate demand to the left.
Which of the following would most likely occur if the federal government increased its spending and enlarged the size of the budget deficit during a period of full employment?
A. The rate of inflation would decline. B. The rate of inflation would rise. C. A recession would develop. D. Interest rates would fall.