Suppose the U

question 177

Multiple Choice

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

• A)It would not change.
• B)It would rise and exceed national saving.
• C)It would rise to a level equal to net foreign investment.
• D)It would fall to a level equal to national saving.

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Definitions:

Inverted-U Theory

A hypothesis that suggests there is a relationship between the level of some activity and the effect it has on performance, which looks like an inverted U, indicating optimal performance at an intermediate level of the activity.

Technologically Progressive

Pertaining to the consistent application and incorporation of new technologies to improve processes, products, or services.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely to changes in price.

Expected Rates

Predicted percentages or values in various contexts, such as interest rates, growth rates, or return on investment.