Expenditure switching refers to
A) a switching back and forth between investment and consumption expenditures.
B) a switching back and forth between domestic and foreign goods in response to changes in the exchange rate.
C) a switching back and forth between domestic and foreign goods in response to changes in the interest rate.
D) a switching of back and forth in the current account from a deficit to a surplus and vice versa.
E) All of the above.
B
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One problem with NAFTA that is not shared by other trade blocs is that
A) national environmental laws differ greatly. B) the countries are at very different stages of economic development. C) the countries speak different languages. D) the countries are not natural trading partners. E) the United States and Mexico have a history of conflict.
An increase in the nominal interest rate would
a. encourage people to hold smaller money balances. b. encourage people to hold larger money balances. c. force the Fed to reduce the money supply. d. cause the real interest rate to decline.