Author Question: When a U.S. firm sells a good abroad for, say, 100 euros (assume 1.5=1euro), U.S. net exports ... (Read 108 times)

chandani · **on:** Jun 30, 2018

When a U.S. firm sells a good abroad for, say, 100 euros (assume 1.5=1euro), U.S. net exports increase by 150. These 150 in exports can be accounted for as 150 increase in capital outflow because ________.

A) private consumption in the foreign country increases by 150
B) if the U.S. firm uses the 100 euros to buy a share of stock in a foreign firm, the firm is supplying U.S. capital to that foreign firm
C) if the U.S. firm uses the proceeds to buy a U.S. bond, capital investment in the foreign country has increased
D) all of the above
E) none of the above

Question 2

Refer to Figure 12.4. Since the housing bubble burst and the economy returned to its initial, pre-bubble level before the corrective policy changed output, the economy actually moved from ________ after the bubble burst.

A) point A to point B
B) point B to point D
C) point A to point C
D) point C to point B