The four main components of the current account are:
a. services, financial assets, unilateral transfers, and debits.
b. net exports, unilateral transfers, services, and domestic bank deposits abroad.
c. government asset holdings abroad, foreign official assets, private bank deposits abroad, and merchandise.
d. unilateral transfers, merchandise, services, and investment income.
e. capital exports, services, merchandise, and royalties.
d
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When two countries choose to use a new currency, they are
A) participating in a monetary union. B) dollarizing. C) forming an optimal currency area. D) increasing their monetary autonomy.
In the simple liquidity preference model, if the money demand curve is elastic, then:
A. small changes to the money supply will cause large changes to the interest rate. B. only large changes to the money supply will cause large changes to the interest rate. C. small changes to the money supply will cause insignificant changes to the interest rate. D. even large changes to the money supply will cause small changes to the interest rate.