Question : 11) A current account deficit A) will not pose a problem, : 1303658

11) A current account deficit

A) will not pose a problem, especially if it is accompanied by an expansionary fiscal policy.

B) may pose no problem if the borrowed funds are channeled into productive domestic investment projects that pay for themselves with the revenue they generate in the future.

C) may still pose a problem, even if the borrowed funds are channeled into productive domestic investment projects.

D) There is no relation between current account surplus and between savings and investment.

E) will pose a problem because the country is borrowing funds from the rest of the world that it won’t be able to pay back later.

12) Which one of the following statements is TRUE?

A) Countries with strong investment opportunities should invest little at home and channel their savings into more productive investment activity abroad.

B) Countries with weak investment opportunities should invest little at home and channel their savings into more productive investment activity abroad.

C) Countries with weak investment opportunities should invest more at home.

D) Countries with weak investment opportunities should invest little abroad.

E) Countries with weak investment opportunities should invest little abroad and channel their savings into more productive investment activity domestically.

13) Countries with

A) strong investment opportunities should invest little at home and channel their savings into more productive investment activity abroad.

B) strong investment opportunities should invest more at home and less abroad.

C) weak investment opportunities should invest more at home.

D) weak investment opportunities should invest little abroad.

E) countries with productive investment should invest exclusively at home.

14) Countries where investment is relatively

A) productive should be net exporters of currently available output.

B) unproductive should be net importers of currently available output.

C) unproductive should be net exporters of currently available output.

D) unproductive should be net exporters of future available output.

E) unproductive should focus on their internal balance.

15) Countries where investment is relatively

A) productive should have current account deficits.

B) productive should have current account surpluses.

C) unproductive should have current account surpluses.

D) productive should balanced current account surpluses.

E) productive should have low outputs.

16) Which one of the following statements is TRUE?

A) Countries where investment is relatively productive should be net importers of current output.

B) Countries where investment is relatively unproductive should be net importers of current output.

C) Countries where investment is relatively productive should be net exporters of current output.

D) Countries where investment is relatively productive should not export or import current output.

E) Countries where investment is relatively unproductive should invest at home.

17) Countries where investment is

A) relatively unproductive should have current account deficits.

B) relatively productive should have current account surpluses.

C) relatively productive should have current account deficits.

D) relatively productive should have balanced current accounts.

E) relatively unproductive should have balanced current accounts.

18) Governments prefer to avoid excessive current account surpluses because

A) the returns to domestic savings are more difficult to tax than those on assets abroad.

B) an addition to the home capital stock may increase domestic unemployment and therefore lead to higher national income.

C) foreign investment in one firm may have beneficial technological spillover effects on other foreign producers that the investing firm does not capture.

D) an addition to the home capital stock may reduce domestic unemployment and therefore lead to higher national income.

E) domestic savings increase with more investment abroad.