Suppose the majority of the shares of British Airways stock were sold to a firm in the United States. Assuming all else remains constant, this will
A) decrease the balance of the U.S. financial account.
B) create a capital inflow in the United States.
C) decrease foreign direct investment in the United States.
D) increase net portfolio investment in the United States.
E) decrease the balance of the U.S. current account.
A
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During financial crisis of 2008-09, the government rescued financial firms and the auto industry. As a result,
A) the government's budget deficit increased, the government's demand for loanable funds increased and private investment was crowded out. B) the government's rescue plan created a surplus of loanable funds. C) the private demand for loanable funds increased. D) the supply of loanable funds decreased in response to the government's budget deficit. E) real interest rates decreased.
All else equal, when interest rates ________, the duration of a coupon bond ________
A) rise; falls B) rise; increases C) falls; falls D) falls; does not change
Opportunistic behavior is best described as a firm
A) gathering as much information as possible before dealing with another entity. B) attempting to make a profit from its dealings with another entity. C) firm trying to take advantage of another entity in its dealings with it. D) selecting another entity to deal with.
What is the benefit of understanding the income and the substitution effects?
A) The income effect might run in the opposite direction of the substitution effect. B) The income effect always runs in the opposite direction of the substitution effect. C) The income and substitution effects just offset each other, which explains a lot. D) The income and substitution effects are proportional to each other.