When considering foreign-income repercussions, the spending multiplier is
A. larger because an increase in domestic imports causes a surplus in the official settlements balance.
B. smaller because an increase in domestic imports causes a current account deficit.
C. smaller because an increase in domestic imports lowers the growth in domestic exports.
D. larger because an increase in domestic imports causes foreign income to rise and thus boosts domestic exports.
Answer: D
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List and briefly describe the four major types of transactions costs involved when dealing with a negative externality
What will be an ideal response?
Based on the circular flow model, money flows from households to businesses in:
a. both factor and product markets. b. product markets. c. factor markets. d. neither factor nor product markets.
To be a successful entrepreneur requires willingness to
a. play it safe b. borrow money c. take risks d. abandon your family
Draw a graph showing the effect of an increase in the saving rate on the production function.
What will be an ideal response?