Describe the role of offshore banking and of offshore currency (eurocurrencies) trading
What will be an ideal response?
Both have mushroomed due to increased international trade, increased multinational corporations and globalization. Students should also emphasize banks' desire to escape domestic government regulations and taxes on financial activities and political concerns from holding deposits in the country that issued them, which increases default concerns on the part of the foreign investors, etc.
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Describe each of the following as a positive demand shock, a negative demand shock, a positive supply shock, or a negative supply shock, and specify how each are represented on the Phillips curve
a. a sudden increase in oil prices b. a large increase in spending on residential construction c. a sudden decrease in household wealth resulting from a stock market crash d. a substantial increase in productivity following technological advancements
Budget surpluses exist when: a. government spending exceeds its tax revenues
b. government tax revenues exceed its spending. c. government spending equals its tax revenues. d. expansionary fiscal policies increase real GDP and the price level.