An Increase in Perceived Risk of Foreign Assets Increased Both

question 70

True/False

An increase in perceived risk of foreign assets increased both the financial account surplus and current account deficit in the United States during the late 1990s.

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Definitions:

Income Increased

A scenario where an individual's or entity's earnings rise, affecting their purchasing power and economic well-being.

Income Elasticity

A measure of how the demand for a good or service changes relative to a change in consumers' income.

Normal Good

A good for which demand increases as the income of consumers increases and decreases as the income of consumers decreases.

Inferior

A term used in economics to describe goods whose demand decreases as the income of the consumer increases, contrasted with normal goods.