A Small Open Economy Has a Current Account Balance of Zero.A

question 60

Multiple Choice

A small open economy has a current account balance of zero.A rise in the world real interest rate causes

• A)a current account surplus.
• B)a financial account surplus.
• C)net borrowing from abroad.
• D)absorption to exceed income.

Comprehend the historical and theoretical perspectives provided by key economists on international trade.

Understand the economic indicators and trends related to trade deficits and trade imbalances.

Understand the dynamics of the trade imbalance between the US and its significant trading partners.

Identify the trend of trade deficits with China and Japan over specific periods.

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Definitions:

Economic Freedom

The measure of how easy it is for members of a society to participate in economic activities without unnecessary restrictions.

The Heritage Foundation

An American conservative think tank based in Washington, D.C., focusing on public policy research and advocacy in areas such as economics, foreign policy, and social issues.

Regulatory Efficiency

The extent to which regulatory policies and procedures achieve desired outcomes without unnecessary imposition of costs or complexity on businesses or individuals.

Rule Of Law

Rule of governing whereby all individuals are accountable to well-defined and established laws that are fairly enforced.