Author Question: In an open economy, the current account balance equals ________. (Assume that the capital account is ... (Read 124 times)

WhattoUnderstand · **on:** Jun 29, 2018

In an open economy, the current account balance equals ________. (Assume that the capital account is zero and net transfers are zero.)

A) net foreign investment + domestic investment
B) net foreign investment
C) net capital outflows
D) the financial account balance + net income on investments

Question 2

An increase in government spending may expedite recovery from a recession in the short run, but in the long run this policy may

A) raise interest rates and reduce consumer expenditures on automobiles and new houses.
B) make domestic businesses less competitive in international markets as the dollar appreciates in value.
C) reduce investment in new capital.
D) All of the above are correct.