Author Question: If the world real interest rate were to fall below the rate at which domestic saving and investment ... (Read 29 times)

Arii_bell · **on:** Jun 30, 2018

If the world real interest rate were to fall below the rate at which domestic saving and investment would be equal ________.

A) saving would be greater than investment so the economy would be running a trade deficit
B) investment would be greater than saving so the economy would be running a trade deficit
C) investment would be greater than saving so the economy would be running a trade surplus
D) saving would be greater than investment so the economy would be running a trade surplus
E) none of the above

Question 2

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 labor demand.