Whenever the balance on the current account (CA) is negative, it indicates that:
a) the trade deficit
b) total spending (GNE) in the economy is greater than income (GNDI) and is financed by barrowing from abroad
c) domestic investment is less than national savings
d) income (GNDI) is greater than total spending (GNE) in the economy and the country is a net lender to the rest of the world
Ans: b) total spending (GNE) in the economy is greater than income (GNDI) and is financed by barrowing from abroad
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Bank A has total deposits of $3 million and total reserves of $1 million. The required reserve ratio is 20 percent. The bank has excess reserves of
A) $20,000 B) $200,000 C) $400,000 D) $40,000 E) There is not enough information provided to answer this question
The simple deposit multiplier is:
A) 1/excess reserves. B) 1/reserve requirement. C) 1/deposit requirement. D) none of the above.
Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumer's choice?
A) A (5 Beers, 5 Pizzas) B) B (0 Beers, 25 Pizzas) C) C (25 Beers, 15 Pizzas) D) None of the above bundles will be chosen.
The maximum number of workers hired is
A. 4.
B. 5.
C. 6.
D. 7.