In an Open Economy,Y = C + I + G

question 19

Multiple Choice

In an open economy,Y = C + I + G + NX.From this we may infer that ________.

• A)output is greater in an open economy than in a closed economy
• B)the condition for goods market equilibrium is that S = I + G + NX
• C)net exports can be zero only if the domestic real interest rate is equal to the world real interest rate
• D)if saving is greater than zero,NX cannot be zero
• E)none of the above

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Definitions:

Face Amount

The nominal value printed on the face of a financial instrument, such as a bond or insurance policy, representing the amount due at maturity.

Issuance

The process of offering new securities to investors for the first time, often to raise capital.

Sold

The past tense indicating that an item, property, or service has been transferred to a buyer in exchange for money or other compensation.

Journal Entry

A record in accounting that represents a transaction where debits and credits are entered, reflecting changes in accounts.