Use the saving and investment equation to explain why the United ...

[Lisaclaire]

Use the saving and investment equation to explain why the United States experienced large current account deficits in the late 1990s.
 
  What will be an ideal response?

Question 2

A firm in monopolistic competition maximizes its profit by ________.
 
  A. differentiating its good and producing the quantity at which price equals marginal revenue
  B. producing the quantity at which marginal revenue equals marginal cost and then adding a markup
  C. raising its price and producing so that it always has excess capacity
  D. producing the quantity at which marginal cost equals marginal reve-nue and charging the highest price at which it can sell that quantity

[alexisweber49]

Answer to Question 1

Investment in the United States was greater than saving in the late 1990s, so net foreign investment was negative. Net foreign investment equals net exports, which approximately equals the current account balance. Negative net foreign investment implies a current account deficit.

Answer to Question 2

D Figure 13.1 shows how a monopolistically competitive firm maximizes its profit.

[Lisaclaire]

Gracias!

[xoxo123]

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