Since the United States has negative net foreignâ investment, its
A. net capital flow must be negative.
B. domestic saving must be less than its domestic investment.
C. exports must be greater than its imports.
D. domestic investment must be less than its domestic saving.
Expansionary fiscal policy is less effective in an open economy because
A. increases in the money supply will reduce interest rates and lower the value of theâ dollar, reducing aggregate demand.
B. increases in government spending can increase interestâ rates, which increases the value of the dollar and crowds out net exports.
C. increases in government spending will be partly spent on importedâ goods, which do not benefit the domestic economy.
D. increases in taxes reduceâ consumption, which in turn reduces consumption of imports and increases net exports.
When the Federal reserve uses contractionary monetary policy to reduceâ inflation, it
A. sells treasury securities increasing interestâ rates, leading to a stronger dollar that lowers net exports in an open economy.
B. buys treasury securities decreasing interestâ rates, leading to a weaker dollar that lowers consumption of durables in a closed economy.
C. sells treasury securities decreasing interestâ rates, leading to a stronger dollar that lowers domestic investment in a closed economy.
D. buys treasury securities increasing interestâ rates, leading to a weaker dollar that increases net exports in an open economy.
If a country saves more than it investsâ domestically, then its net foreign investment must be (positive, negative, or zero)?
Since the United States has negative net foreignâ investment, its
A. net capital flow must be negative.
B. domestic saving must be less than its domestic investment.
C. exports must be greater than its imports.
D. domestic investment must be less than its domestic saving.
Expansionary fiscal policy is less effective in an open economy because
A. increases in the money supply will reduce interest rates and lower the value of theâ dollar, reducing aggregate demand.
B. increases in government spending can increase interestâ rates, which increases the value of the dollar and crowds out net exports.
C. increases in government spending will be partly spent on importedâ goods, which do not benefit the domestic economy.
D. increases in taxes reduceâ consumption, which in turn reduces consumption of imports and increases net exports.
When the Federal reserve uses contractionary monetary policy to reduceâ inflation, it
A. sells treasury securities increasing interestâ rates, leading to a stronger dollar that lowers net exports in an open economy.
B. buys treasury securities decreasing interestâ rates, leading to a weaker dollar that lowers consumption of durables in a closed economy.
C. sells treasury securities decreasing interestâ rates, leading to a stronger dollar that lowers domestic investment in a closed economy.
D. buys treasury securities increasing interestâ rates, leading to a weaker dollar that increases net exports in an open economy.
If a country saves more than it investsâ domestically, then its net foreign investment must be (positive, negative, or zero)?