People Sometimes Worry That American Trade with Other Countries Will

question 97

Multiple Choice

People sometimes worry that American trade with other countries will lead to large U.S.trade deficits and the movement of massive amounts of American capital out of the country.This worry is unfounded because countries cannot

• A)increase savings at the same time that a trade deficit grows.
• B)spend more than they earn.
• C)invest more than they save.
• D)have both current account and financial account deficits at the same time.

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Definitions:

Worker Productivity

A measurement of the efficiency and effectiveness with which workers accomplish tasks, often gauged as output per unit of input, such as hours worked.

Real Earnings

Earnings adjusted for differences in the general level of prices across time periods or geographic areas. When real earnings are equal, the same bundle of goods and services can be purchased with the earnings.

Strong Unions

represent organizations that negotiate with employers on behalf of employees regarding wages, work conditions, and benefits.

Identical Preferences

The notion that two or more individuals value choices or outcomes in exactly the same way, having congruent likes and dislikes.