If the balance on the current account is zero, which of the following transactions will cause it to go into deficit?
a. The Moscow Capital Investment Corporation makes a loan to a US firm
b. A US subsidiary exports raw materials to its French parent company
c. US firms and individuals receive dividends on US investments in Latin America
d. US tourists in Great Britain purchase pounds sterling
e. Foreigners purchase US securities
Answer: d. US tourists in Great Britain purchase pounds sterling
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A PPF will not shift because of an increase in
a. the stability of the rules of the game b. capital stock c. resource availability d. unemployment e. technological change
Which of the following most clearly indicates that fiscal policy is becoming more expansionary?
a. An increase in the budget deficit relative to GDP b. A reduction in the budget deficit relative to GDP c. An increase in the budget surplus relative to GDP d. An increase in the nominal (dollar) size of the budget deficit