A Small Open Economy Increases Its Desired Saving

question 19

Multiple Choice

A small open economy increases its desired saving.This causes the world real interest rate to ________ and the country's current account balance to ________.

• A)fall; fall
• B)remain unchanged; rise
• C)fall; rise
• D)remain unchanged; fall

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Definitions:

Estimated Warranty Expense

Estimated Warranty Expense is an anticipated cost a company expects to incur related to its product warranties, predicting repairs or replacements it will provide for products sold within a given period.

Average Cost

A method of inventory valuation which calculates the cost of goods sold and ending inventory based on the average cost of all similar items.

Journal Entries

These are records of all the financial transactions of a business, recorded in the chronological order in which they occur.

Units Sold

The total quantity of products or goods a company has sold during a particular period.