In a Small Open Economy,if the World Real Interest Rate

question 83

Multiple Choice

In a small open economy,if the world real interest rate is above the rate at which national saving exceeds domestic investment,then there will be a trade ______ and ______ net capital outflow.

• A) surplus; negative
• B) deficit; positive
• C) surplus; positive
• D) deficit; negative

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating the firm's overall financial gain.

Excess Capacity

A situation where a company or economy can produce more goods than are being demanded, indicating underused resources.

Average Total Cost

Average total cost is the total cost of production divided by the total quantity produced, representing the cost per unit of output.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating surplus beyond the normal profit level.