In an Open Economy,Y = C + I + G

question 19

Multiple Choice

In an open economy,Y = C + I + G + NX.From this we may infer that ________.

• A)output is greater in an open economy than in a closed economy
• B)the condition for goods market equilibrium is that S = I + G + NX
• C)net exports can be zero only if the domestic real interest rate is equal to the world real interest rate
• D)if saving is greater than zero,NX cannot be zero
• E)none of the above

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Definitions:

Net Assets

The total assets of an entity minus its total liabilities, indicating the entity's net worth or equity value.

Consolidated Financial Statements

Financial statements that present the financial position and results of operations of a parent company and its subsidiaries as one single entity.

Parent Company

A parent company is a corporation that owns enough voting stock in another corporation (subsidiary) to control its board of directors and therefore its operations and policies.

Subsidiary

A company that is completely or partially owned and wholly controlled by another company, referred to as the parent company.