An example of a deficit item on the U.S. balance of payments is
A) the sale of a spark plug made by a U.S. firm in Michigan to a Nissan plant in Tennessee.
B) the purchase of Japanese yen by a U.S. firm.
C) a deposit in a bank in Chicago by the government of Saudi Arabia.
D) the payment of a dividend by a British firm to a U.S. family.
Answer: B
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If real income rises faster than absorption during a time of economic expansion, then
A) the nation will experience a current account surplus. B) the nation will experience a current account deficit. C) national production will increase until absorption and income are balanced. D) the nation's imports must rise relative to its exports.
The government protects rights in a market economy by providing national defense, a court system, and a well-functioning political system
a. True b. False