What are the three balance of payments accounts? Briefly describe them. What is the relationship among the three?
What will be an ideal response?
The three balance of payment accounts are the current account, the capital account, and the official settlements account. The current account records exports, imports, net interest, and net transfers. The capital account records foreign investment in the United States and U.S. investment abroad. Finally, the official settlements account shows changes in U.S. official reserves, the government holdings of foreign currency. The relationship is that the current account balance plus capital account balance plus official settlements account must sum to zero.
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Economics is the only social science and the only business discipline for which the Nobel Prize is awarded.
a. True b. False
A 10 percent increase in the cost of restaurant meals, which are a luxury, will most likely
A. increase the purchase of meals by 10 percent. B. increase the purchase of meals by less than 10 percent. C. decrease the purchase of meals by more than 10 percent. D. decrease the purchase of meals by less than 10 percent.
A kink in the demand curve facing an oligopolist is caused by:
A. rapidly rising marginal revenues. B. excessive advertising. C. the belief that competitors will follow price increases but not match price decreases. D. the tendency of competitors to follow price reductions but not price increases.
In an economy where planned aggregate spending is given by PAE = 3,000 + .75Y ? 10,000r, the central bank is currently setting the interest rate at 0.05 (5 percent). If potential output equals 10,800, the central bank must ________ the interest rate to close the ________ gap.
A. raise; recessionary B. raise; expansionary C. lower; expansionary D. lower; recessionary