What are the major components of the capital and financial account?
What will be an ideal response?
The capital and financial account breaks down into two account, the capital account and the financial account. The capital account can be either positive or negative and measure debt forgiveness. It is the net of how much debt owed by foreigners was forgiven by Americans and how much debt owed by Americans was forgiven by foreigners.
The financial account records the sale and purchase of real and financial assets and the direction in which the resulting funds flow. If a foreigner buys a U.S. asset, it would be recorded as a plus (+) to the financial account, while U.S. purchases of foreign goods are recorded with a minus (?).
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When consumers or businessmen stop collecting information to make decisions at the point where marginal cost of data collection equals the marginal utility of the data, economists would call the decisions based on existing data
a. perfect decisions. b. optimally imperfect decisions. c. joint decisions. d. rent seeking.
Which of the following reduced the demand stimulus effects of the Fed's low interest rate policy pursued during, and after, the financial crisis of 2008-2009?
a. Declining stock prices during 2010-2012. b. A reduction in the velocity of money. c. An increase in earnings derived from money market accounts, saving deposits, and similar saving instruments. d. A sharp increase in the rate of inflation during 2009-2012.