What is the difference between the U.S. current account deficits of the 1980s and the 1990s?
What will be an ideal response?
In the 1980s, the government budget balance (T-G) turned into a large negative, and foreign financing filled the gap. In the 1990s, the federal budget moved to a positive balance, but investment expanded and private savings fell, overwhelming the changes in the government budget position.
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According to this Application, during the late 1980s, Argentina pegged its currency to the U.S. dollar. After 1995, the U.S. dollar appreciated sharply on world markets. Since the Argentinean peso was pegged to the U.S
dollar, the appreciation of the dollar essentially caused A) the peso to appreciate relative to the dollar, but depreciate on world markets. B) a sharp devaluation of the dollar relative to the peso. C) a severe revaluation of the peso relative to the dollar. D) the peso to also appreciate sharply on world markets.
The size of the underground economy would tend to decrease if the government of a country
A) increased income tax rates. B) increased business taxes. C) decreased government regulations on businesses. D) made over-the-counter drugs illegal.
Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. Her wage package is W = 1,000 + 0.4Q, where Q is her dollar volume of sales. Her productivity is Q = 200e + µ, where e denotes her hours of effort and µ is a random variable with mean 0. She has an effort cost of C = e2. Under this contract, the expected value of her total wages will be:
A. $4,200.00. B. $3,060.00. C. $1,000.00. D. $200.00.
The rate of return that financial investors require to hold a risky asset minus the rate of return on a safe asset is called the:
A. risk premium. B. real interest rate. C. nominal interest rate. D. discount rate.