Recall Application 2, "World Savings and the U

question 110

Multiple Choice

Recall Application 2, "World Savings and the U.S. Current Account Deficits," to answer the following questions:
-According to the application, the U.S. can continue having current account deficits only because:

• A) the rest of the world continues to sells U.S. assets.
• B) Americans continue to buy U.S. assets.
• C) Americans continue to buy foreign assets.
• D) the rest of the world continues to buy U.S. assets.

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Definitions:

Federal Funds Rate

The interest rate charged in the federal funds market; the interest rate banks charge one another for overnight borrowing; the Fed’s target interest rate.

Fiscal Policy

Involves government policies on taxation and spending that aim to influence a country's economic conditions, such as controlling inflation, unemployment, and promoting economic growth.

Transfer Payments

Payments made by the government to individuals through various social benefit programs, without the government receiving any goods or services in return.

Government Purchases

Expenditures by the government for goods and services that directly satisfy public consumption or are invested in public infrastructure.