If the United States has a net export surplus, which of the following must be true?
A) Domestic private saving must be greater than net foreign investment.
B) Net foreign investment must be positive as well.
C) Domestic public saving must be greater than net foreign investment.
D) The balance on the financial account must equal the balance on the current account.
B
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If people speculate that a run on one bank will cause a run on all banks in the financial system, and this speculation proves accurate, then the financial system would experience what is known as a
A) securitization meltdown. B) commodity crisis. C) bank panic. D) institutional death spiral.
Starting from equilibrium in the ISLM framework, a decrease in money demand results in
A) a rise in income and the interest rate. B) a rise in income and a decline in the interest rate. C) a decline in income and the interest rate. D) a decline in income and a rise in the interest rate.