Using an equation, explain why governments prefer to avoid excessive current account surpluses?
What will be an ideal response?
This follows from the national income identity, S = CA + I, which says that total domestic savings, S, is divided between foreign asset accumulation, CA, and domestic investment, I.
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If competing price searchers adjust their own prices on the basis of a close monitoring of their rival's prices,
A) all prices will tend to be the same, which proves prices are not competitive. B) all prices will tend to be the same, which proves sellers are not competing on price. C) each price searcher's demand curve will be indeterminate. D) prices will fluctuate regularly. E) prices will rise when costs increase but will not fall when costs decrease.
One of the problems experienced by the savings and loan industry during the 1980s was
A) managers lack of expertise to manage risk in new lines of business. B) heavy regulations in the new areas open to S&Ls. C) slow growth in lending. D) close monitoring by the FSLIC.