Reference no: EM13953955
1. If a nation's income exceeds its spending, then
savings will be less than domestic investment
the nation must run a current account deficit
the balance of payments will have deficits for the next two years
the nation must run a capital account deficit
2. The US savings deficit can be attributed, in part, to
the growing US budget deficit
high real interest rates abroad
low American investment in plant and equipment
rising US taxes on capital accumulation
3. In order to reduce its current account deficit, the United States must do which of the following?
reduce the federal budget deficit
lower national product relative to national spending
reduce savings relative to domestic investment
reduce the federal budget surplus
4. In a freely floating exchange rate system, if the capital account surplus for the U.S. rises, what will most likely happen to the real value of the dollar?
it will decline
it will rise
there is no impact on the dollar
the IMF will step in to adjust rising exchange rates
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