From the point of view of a particular country, capital outflows are:
A. purchases of domestic assets by foreigners.
B. purchases of foreign goods or services by domestic households or firms.
C. purchases of domestic goods or services by foreigners.
D. purchases of foreign assets by domestic households or firms.
Answer: D
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The traditional Keynesian approach to fiscal policy assumes
A) exchange rates are fixed. B) the focus of attention should be the long run. C) prices are flexible while interest rates are not. D) current taxes are the only taxes taken into account by firms and consumers.
Graphs are valuable because they facilitate interpretation of data
a. True b. False Indicate whether the statement is true or false
What is the expected outcome when trade occurs in a monopolistically competitive industry if the nations have similar tastes, technology, products, and costs?
a. No trade is possible. b. Consumers are left with no choices. c. Each firm has a larger market in which to sell, and consumers have more choices of sellers and products. d. Transportation costs become the driving factor.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C