(Consider This) What is the difference between financial investment and economic investment?
A. There is no difference between the two.
B. Financial investment refers to the purchase of financial assets only; economic investment
refers to the purchase of any new or used capital goods.
C. Economic investment is adjusted for inflation; financial investment is not.
D. Financial investment refers to the purchase of assets for financial gain; economic
investment refers to the purchase of newly created capital goods.
Answer: D
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Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price. B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price. C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy. D) Both A and B are correct. E) Both A and C are correct.
Suppose the U.S. inflation rate falls while the inflation rate among the members of the European Monetary Union (EMU) holds constant. Other things equal, what will happen in the balance of payments accounts?
What will be an ideal response?