Which of the following would be a debit in the U.S. capital account?
A. A U.S. publisher purchases a copyright from a French author for $3,000.
B. A Chinese importer buys $10,000 of cigarettes from a U.S. manufacturer.
C. Egypt forgives $100,000 of debt owed by the U.S. government.
D. A U.S. corporation sells $50,000 of stock to investors in Japan.
Answer: A
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Everything else being constant, a lower real interest rate
A) increases desired saving and net exports. B) decreases desired saving but increases net exports. C) increases desired saving and investment. D) increases desired investment but decreases net exports.
The life cycle effect characterizes a lifetime income profile in which income
a. tends to follow a seasonal pattern. b. rises as a worker gains maturity and experience. c. rises and falls in conjunction with the business cycle. d. falls during the early years of market activity and peaks at retirement.