In a Two-Period SOE Model, Holding Everything Else Constant, an Increase

question 28

Multiple Choice

In a two-period SOE model, holding everything else constant, an increase in current income

• A)unambiguously decreases the current account surplus.
• B)must reduce the present value of taxes.
• C)has no effect on the current account surplus.
• D)unambiguously increases the current account surplus.
• E)has an uncertain effect on the current account surplus.

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Definitions:

Tombstone Advertisement

A print advertisement that announces a forthcoming sale of securities in a format similar to that of a tombstone.

Waiting Period

A set length of time that must pass before a certain action can be taken or a particular event occurs, often used in legal contexts.

Five-Year Terms

Fixed periods of five years that are often applied to political offices, employment contracts, or agreements.

Securities And Exchange Commission

A U.S. federal agency that supervises and regulates the securities market to protect investors.