When Current Account Deficits Are Used to Finance Investment Spending,such

question 45

Multiple Choice

When current account deficits are used to finance investment spending,such deficits may be self-correcting because

• A) they promote more responsible government policies.
• B) the resulting increase in the capital stock over time shifts the output supply curve to the right.
• C) the resulting increase in the capital stock over time shifts the output demand curve to the right.
• D) the resulting increase in national indebtedness increases labour demand.
• E) interest rates decline.

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Definitions:

Lemonade Stand

A small, temporary drink stand often run by children, where lemonade is sold, typically as an introduction to business principles.

Transfer Price

The price at which goods, services, or intellectual properties are traded between different divisions within the same company.

Transfer Price

The price at which divisions of a company transact with each other, such as the trade of supplies or labor between departments.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.