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)?
Related textbook solutions
Related questions
An economy with zero net exports is described below:
| C | = 100 + 0.6 (Y 'T) |
| I p | = 70 |
| G | = 120 |
| NX | = 0 |
| T | = 150 |
| The multiplier in this economy is 2.5. | |
A. Find short-run equilibrium output.
Instruction: Enter your response as an integer value.
Short-run equilibrium output: .
B. Economic recovery abroad increases the demand for the country's exports; as a result, NX rises to 80.
Instruction: Enter your response as an integer value.
Short-run equilibrium output (Click to select)decreases/ increases to ________ .
C. Assume that foreign economies are slowing, reducing the demand for the country's exports so that NX = -80. (A negative value of net exports means that exports are less than imports.)
Instruction: Enter your response as an integer value.
Short-run equilibrium output (Click to select)increases/decreases to ___________ .
D. Which of the following best describes the tendency of recessions and expansions to spread across countries?
1. Lower planned aggregate spending in one nation will reduce the amount of goods it exports abroad, thereby lowering the value of imports for its trading partners, which will reduce its short-term equilibrium output as well.
2. Lower planned aggregate spending abroad means that fewer goods will be exported from a specific nation, leaving more goods available for domestic consumption (C) in that nation, which will increase its short-term equilibrium output.
3. Lower planned aggregate spending abroad will reduce the amount of investment that flows into domestic industries from other countries, thereby reducing domestic short-term equilibrium output.
4. Lower planned aggregate spending in a nation means fewer imports of foreign goods, thereby reducing the short-term equilibrium output of its trading partners through lower net export (NX) values in those nations.
