The Current Account Surplus Is

question 31

Multiple Choice

The current account surplus is

• A) an increasing function of disposable income and an increasing function of the real exchange rate.
• B) a decreasing function of disposable income and a decreasing function of the real exchange rate.
• C) a decreasing function of disposable income and an increasing function of the real exchange rate.
• D) only a decreasing function of disposable income.
• E) only an increasing function of the real exchange rate.

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Definitions:

Effective Annual Interest Rate

The actual return on an investment or the real cost of a loan, accounting for the compounding of interest over a year.

Line of Credit

A financial arrangement providing the borrower the right to draw funds up to a specified limit at any time within a fixed period.

Compensating Balance

A minimum account balance that a borrower is required to maintain as a condition of borrowing from a lender, often used to offset the cost of maintaining the loan.

Accounts Payable Period

The average time it takes for a company to pay off its suppliers.