Persistent Current Account Deficits in the United States

question 115

Multiple Choice

Persistent current account deficits in the United States

• A)can be seen as a vote of confidence in the strength of the U.S.economy.
• B)cause persistent declines in investment in the United States.
• C)cause U.S.investors to accumulate more foreign assets than foreign investors accumulate U.S.assets.
• D)will eventually cause the value of the dollar to rise.

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Definitions:

Income Effect

How a shift in income, whether for an individual or an economy, influences the amount of a good or service that is requested.

Leisure

Free time when one is not working or occupied, offering the opportunity for rest, recreation, or other personal activities.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, reflecting how individuals respond to changes in income or working conditions.

Indifference Curve

A set of points, each point representing a combination of goods X and Y, all of which yield the same total utility.