The precautionary demand for holding money arises because
A) people want be able to make unexpected purchases or to meet emergencies.
B) credit cards charge low interest rates, which makes money more attractive than credit.
C) expected transactions are completed more easily with debit cards than with credit cards.
D) people would rather hold money in the form of time deposits than in the form of hard currency.
A
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The country of Pimm exports $500 billion worth of goods and services and imports $400 billion worth of goods and services. Net interest income paid abroad is $50 billion and net transfers are $0. The current account balance is ________
A) $50 billion B) $100 billion C) $150 billion D) $975 billion
A current account deficit is
A) good because a country wants to own the others. B) bad because every country should have a surplus. C) good because it allows to smooth consumption. D) it does not matter.