When S Exceeds I,an Open Economy Has a Trade

question 26

Multiple Choice

When S exceeds I,an open economy has a trade:

• A) surplus
• B) deficit
• C) equilibrium
• D) any of the above

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Definitions:

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments and are issued at a deep discount, maturing at face value.

STRIPS

Separate Trading of Registered Interest and Principal Securities, a type of U.S. government security that allows the separate trading of interest and principal components.

Treasury Notes

Intermediate-term U.S. government debt security with a maturity of 1 to 10 years and pays interest every six months.

Maturity at Issue

The predetermined date when a financial instrument, such as a bond, will come due and the principal is to be paid back to investors.