Consider a small open economy in equilibrium with a zero current account balance. What happens to national saving, investment, and the current account balance in equilibrium if
(a) future income rises?
(b) business taxes rise?
(c) government expenditures decline temporarily?
(d) the future marginal product of capital rises?
(a) Saving curve shifts left, so S falls, I is unchanged, CA falls.
(b) Investment curve shifts left, so S is unchanged, I falls, CA rises.
(c) Saving curve shifts right, so S rises, I is unchanged, CA rises.
(d) Investment curve shifts right, so S is unchanged, I rises, CA falls.
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The yield to maturity for a one-year discount bond equals the increase in price over the year, divided by the
A) initial price. B) face value. C) interest rate. D) coupon rate.
Following the collapse of its housing and stock markets around 1990, the Japanese government ________
A) effectively managed the crisis, limiting the damage to the Japanese economy B) took only limited action in response to the crisis C) was able to rely on private initiatives in quickly reversing the course of GDP in the 1990s D) fixed the value of the yen to the Euro and pursued an aggressive monetary policy