In a Large Open Economy, an Increase in Productivity Will

question 65

Multiple Choice

In a large open economy, an increase in productivity will lead in the long run to

• A)an increase in the real interest rate.
• B)an increase in the current account balance.
• C)an increase in the price level.
• D)a decrease in investment spending.

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Definitions:

Trading Securities

Financial instruments held by a firm for the purpose of short-term profit through trading on a stock exchange.

Sale

The act of selling a product or service in exchange for money or other compensation.

Equity Securities

Financial instruments that represent ownership interest in a company, such as stocks.

Significant Influence

The power to participate in the financial and operating policy decisions of an investment but is not control or joint control of those policies.