Define the official settlements balance. Is there any difference between the United States and other countries in terms of what this balance measures? How does this affect the ability of the countries to run current account deficits?
What will be an ideal response?
For most countries it measures international reserve changes. For the United States, it records changes in short-term U.S. liabilities held by foreign monetary agencies. This demand for dollar denominated short-term debt by foreign central banks permits the United States to finance current account deficits largely with dollars. Other countries must finance such deficits by selling foreign currency and, as a result, face a greater constraint on their ability to run deficits as they eventually run out of international reserves. Such a constraint does not exist for the United States.
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When interest rates rise,
A) borrowing costs decline, and total planned real expenditures decline. B) borrowing costs increase and total planned real expenditures increase. C) borrowing costs decline, and total planned real expenditures increase. D) borrowing costs increase, and total planned real expenditures decline.
Which of the following is considered a default-risk-free instrument?
A) a three-month commercial paper issued by GE B) a share of stock issued by Google C) a three-month Treasury bill D) a ten-year bond issued by Intel
A tariff is a
A. subsidy to workers harmed by U.S. trade with foreign countries. B. limit on the quantities of a good that can be imported each year. C. tax on exports that tends to make them cheaper for foreigners to buy. D. tax on imports that raises their prices and makes them less attractive to domestic consumers.
Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, the economy will experience the most future economic growth if it chooses what point now?
A. J. B. K. C. M. D. N.