Explain why a merchandise trade deficit created by imports of consumer goods is more troublesome than a merchandise trade deficit created by imports of capital goods
A merchandise trade deficit created by imports of consumer goods is unlikely to spur economic growth,
while a merchandise trade deficit created by imports of capital goods may stimulate economic growth that
will lead to an expansion of exports in the future, making it easier to offset the merchandise trade deficit
with a future trade surplus.
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Given the information in Scenario 4.3, erasers and good b, are:
A) substitutes. B) complements. C) completely unrelated. D) normal. E) inferior.
Which of the following situations will cause the demand for U.S. dollars to rise in the foreign exchange market?
a. The price level in the United States rises faster than the price level in the United Kingdom. b. The interest rate in the United Kingdom falls while the interest rate in the United States remains constant. c. The real GDP in the United States grows while the real GDP in the United Kingdom remains constant. d. The tax rate in the United States rises while the tax rate in the United Kingdom does not change.