If international capital flows are highly responsive to interest rates, expansionary fiscal policy will
A. lead to current account surpluses.
B. lead to financial account deficits.
C. be totally ineffective.
D. lead to financial account surpluses.
Answer: D
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A few years ago, you bought a bond with no expiration and a fixed annual interest payment of $1,000 at a price of $10,000. If the interest rate in the economy is now 12.5% a year and you want to sell the bond, the maximum price that you can get for it is
A. $7,500. B. $12,500. C. $9,750. D. $8,000.
Under laissez-faire, the allocation of resources among different products depends on
A. consumer preferences. B. production costs. C. Both a and b are correct. D. Neither a nor b is correct.
A permanent reduction in inflation would
a. permanently reduce shoeleather costs and permanently lower unemployment b. permanently reduce shoeleather costs and temporarily raise unemployment c. temporarily reduce shoeleather costs and temporarily lower unemployment d. temporarily reduce shoeleather costs and temporarily raise unemployment
Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market ________ of Japanese currency and creates a balance-of-payments ________ for the United States.
A. shortage; surplus B. surplus; surplus C. surplus; deficit D. shortage; deficit