A current account deficit implies that* more goods and services are exported than are imported. the country borrowed from abroad more than it loaned and/or sold off some of its assets. the country is going bankrupt. the value of the dollar will rise. there is excessive consumption of foreign financial assets.
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- The size of a country’s national debt should not be of much economic concern as long as:a. the debt does not lead to rising inflation.b. the debt is funded from international sourcesc. the general population hoards treasury billsd. it increases at a slower rate than GDP doesIf a country runs a deficit on its current account, it has to be financed by running a capital account surplus which limited to borrowing from abroad TRUE OR FALSE?Which would indicate that hyperinflation exists? a. Sales on credit are at lower prices than cash sales. b. Inflation is approaching or exceeds 20% per year. c. Monetary items do not increase in value. d. People prefer to keep their wealth in nonmonetary assets or a stable foreign currency.
- If a central bank decreases interest rates, then gradually: a. the country's gross domestic product is likely to decrease. b. foreign exchange rate is likely to appreciate. c. demand for exported goods and services is likely to increase. d. flows of investment funds into the country are likely to decrease.If a country devalues its currency, that will immediately improve its trade deficit.Which of the following best describes the situation when the value of a country’s exports is more than that of its imports? a. The country is experiencing a financial account surplus. b. The country is experiencing a current account surplus. c. The country is experiencing a financial account deficit. d. The country is experiencing a current account deficit.
- 6. If the U.S. runs a current account deficit next year, which of the following are necessarily true: A) U.S. will have to run a government budget deficit B) The Central Bank of China will have to buy U.S. treasury bonds C) The U.S. will import more goods and services than it exports D) U.S. national saving will be less than U.S. national investmentWhy does the size of Egypt’s current account deficit put pressure on the value of the Egyptian pound to decline? How does the size of the capital account affect that pressure? Explain1. In order to reduce its current-account deficit, the United States would NOT do which of the following? a . raise national product relative to national spending b. decrease savings relative to domestic investment c . increase savings relative to domestic investment d . reduce the federal budget deficit
- Which one of the factors is most likely to be associated with an increase in the US trade deficit: higher savings rate in the US O higher investment opportunity in the US O low spending rate, relative to income levels in the US O depreciation of the US dollarWhen a country's currency depreciates against the currencies of major trading partners: O a. The country's exports tend to fall and imports rise. O b. The country's exports tend to rise and imports fall. c. The country's exports tend to rise and imports rise. O d. The country's exports tend to fall and imports fall.Suppose America experiences a negative balance on goods and services (imports higher than exports.) If the exchange rate decreases, then a . imports will be expensive. b . goods and services balance will remain unchanged. c . deficit on goods and services will be reduced d . deficit on goods and services will increase e . None of the answers is correct