If Y = C + I + G + (X

question 7

Multiple Choice

If Y = C + I + G + (X - M) and Y = $190, C = $100, I = $50 and G = $50 then, in equilibrium, X - M must equal

• A)-$20
• B)-$10
• C)$10
• D)$20
• E)$50

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Definitions:

Available-for-sale Debt Portfolio

A categorization of debt investments not classified as held-to-maturity or trading securities, which can be sold prior to maturity.

Unrealized Loss

A financial situation where an investment holds a lower market value than its purchasing price, yet the investor has not actually sold it to incur a realized loss.

Amortized Cost

The initial investment cost adjusted for amortization or depreciation over the period of the investment.

Effective Interest Rate

The real cost of borrowing after adjusting for compounding interest and all fees. It provides a more accurate representation of the actual financial charge associated with a loan.