Homework Sourse1 Which of the following would be an indication that a natio
1. Which of the following would be an indication that a nation has a balance of payments deficit?
A. Its holdings of official reserves are declining.
B. It is borrowing abroad to finance capital investments.
C. It is buying gold abroad.
D. Its imports exceed its exports.
2.
Which of the following is not a reason why after the Great Recession, when the recovery turned out to be very weak, economic policy in the U.S. had to turn forcefully toward fiscal policy?
A. The banking system fell into a liquidity trap.
B. There was a time lag implementing monetary policy.
C. Monetary policy suffered from cyclical asymmetry.
D. Interest rates had already been cut to very low levels.
| A. Its holdings of official reserves are declining. | ||
| B. It is borrowing abroad to finance capital investments. | ||
| C. It is buying gold abroad. | ||
| D. Its imports exceed its exports. |
Solution
1. A nation\'s BOP deficit means the nation imports more capital, services and goods than what it exports. So the choice will be D. Its imports exceed its exports.?
2.
D. Interest rates had already been cut to very low levels.
| D. Interest rates had already been cut to very low levels. |
