Suppose a family from Peru eats in a restaurant in Salt Lake City, Utah. How will this transaction be recorded in U.S. international transactions?
A. It is recorded in the current account as a positive (plus) item.
B. It is recorded in the current account as a negative (minus) item.
C. It is recorded in the capital account as a positive item.
D. It is recorded in the current account as a negative item.
Answer: A. It is recorded in the current account as a positive (plus) item.
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A. a theoretical proposition, not a moral proposition. B. a proposition supported by public choice economists. C. based on empirical evidence that fiscal policy can be effective in smoothing business cycles. D. based on the political realities of voters wanting their government to respond to recessions.