In the Two-Period SOE Model, Equal Increases in Current and Future

question 1

Multiple Choice

In the two-period SOE model, equal increases in current and future income imply that

• A)C + G decreases.
• B)we can't say what happens to the current account surplus.
• C)the current account surplus decreases.
• D)there is no change in the current account surplus.
• E)the current account surplus increases.

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Definitions:

Implicit Costs

Input costs that do not require an outlay of money by the firm

Outlay

The amount of money spent on a particular item or service, serving as expenses in financial transactions or projects.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing between options.

Capital

Economic resources that are used to create goods and services, such as buildings, machinery, and equipment.