Which of the following statements best describes the dangers of a sustained pattern of high budget deficits and high trade deficits?
a. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is not funding short-term portfolio investment in government bonds but instead is funding long-term physical capital investment by firms.
b. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is not funding long-term physical capital investment by firms but instead is short-term portfolio investment in government bonds.
c. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the outflow of foreign investment capital is from short-term portfolio investment in government bonds and not from long-term physical capital investment by firms.
d. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is funding both long-term physical capital investment by firms and short-term portfolio investment in government bonds.
b. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is not funding long-term physical capital investment by firms but instead is short-term portfolio investment in government bonds.
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Luxury goods have income elasticity:
A) of less than zero. B) between zero and one. C) equal to one. D) greater than one.
Marginal cost is defined as the increase in total cost resulting from an increase in:
a. one unit of output. b. output of 100 units. c. a firm's plant size. d. one unit of labor.
Cashing out capital gains in Virtual Currency System #3 (i.e., turning virtual capital gains into real world currencies) causes the nation's:
a. Monetary base to fall. b. M2 money supply to rise. c. M2 money multiplier to remain the same. d. M2 money supply to fall.
Pure rate of interest refers to the interest rate that:
A. Borrowers pay to lenders in their own family or circle of close friends B. Serves solely as payment to lenders for giving up current use of their funds C. Is the difference between the actual rate and the theoretical rate D. Measures the compensation to lenders for taking on the risks involved