Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment. Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment
What will be an ideal response?
In an open economy, the saving and investment equation implies that a country's national saving must always equal domestic investment plus net foreign investment or (S = I + NFI). Japan's saving in excess of domestic investment implies that net foreign investment is positive for Japan so that Japan must be investing in other countries. Companies like Toyota, Honda, and Nissan have built plants in the United States.
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Expansionary fiscal policy would involve ________, whereas contractionary fiscal policy would involve ________
A) increasing the money supply; increasing personal income taxes B) increasing corporate income taxes; raising interest rates C) increasing transfer payments; increasing corporate income taxes D) increasing government purchases; increasing transfer payments
An example of monopoly power in input markets is
A) major league baseball owners in the market for player services. B) the United Auto Workers union in the market for auto worker services. C) OPEC in the market for crude oil. D) all of the above