If a nation has flexible exchange rates and its current and capital accounts equal zero, then the:
a. Financial account must be positive
b. Financial account can be positive or negative depending on the size of the budget deficit and exchange rate.
c. Reserves account can be positive or negative depending on the size of the budget deficit and exchange rate.
d. Financial account minus the reserves account must equal zero.
.D
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A country's government would like to raise the price of one its most important agricultural crops, coffee beans. Which of the following government programs will result in higher prices for coffee beans?
A) An import quota on coffee beans B) An acreage limitation program which provides coffee bean farmers financial incentives to leave some of their acreage idle C) An import tariff on coffee beans D) all of the above
The saying "What's that got to do with the price of tea?" reflects
A) two markets where general equilibrium analysis would be most useful. B) two markets where general equilibrium analysis likely won't be very useful. C) two markets where the products are clearly closely related. D) two markets where firms are incredibly greedy.