Suppose the current account of a country is initially in balance. A new transaction occurs so that the current account is now in surplus. Official reserve balance is maintained before and after the transaction occurs. From this, we know that
A. the government must make official reserve transactions.
B. the financial account is now in deficit.
C. the balance of goods and services is now in surplus.
D. the balance of trade is now in surplus.
Answer: B
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The process by which simultaneous withdrawals by a particular bank's depositors results in the bank closing is known as a
A) contagion. B) bank run. C) financial crisis. D) bank panic.
A cartel maximizes industry profit by
a. eliminating quotas b. producing at the kink in its demand curve c. producing where MR = MC d. cutting production costs to become more efficient e. producing more output than a monopoly would
For a competitive, profit-maximizing firm, the demand curve for labor will shift in response to a change in the
a. wage rate. b. quantity of labor demanded. c. price of the product that the firm sells. d. an increase in the supply of labor.
The U.S. government funds the federal budget deficit by
A. borrowing from large private banks at favorable terms and low interest rates. B. selling securities such as Treasury bonds and Treasury bills. C. selling stock in government-owned corporations D. selling shares in gold owned by the Federal Reserve via special drawing rights.