Foreign Savings

question 67

Multiple Choice

Foreign savings:

• A) keep interest rates lower in the United States than they would otherwise be.
• B) keep interest rates higher in the United States than they would otherwise be.
• C) are harmful to the U.S.economy.
• D) only occur through buying Treasury securities.
• E) make it so U.S.firms and governments must undertake their activities at higher costs.

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Definitions:

Isoquants

Curves on a graph that represent combinations of factors of production that yield the same level of output.

Scale

The size or level of activity of a project, business, or operation, which can significantly affect its efficiency, costs, and profitability.

Decreasing Returns

A principle where an increase in the amount of one factor of production, while other factors are held constant, results in a lower ratio of output per input.

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the incremental output will eventually decrease.