A wealthy Japanese executive decides to buy a large amount of U.S. assets. This would contribute to
a. a deficit in the U.S. current account
b. a deficit in the U.S. capital account
c. a surplus in the U.S. current account
d. a surplus in the U.S. capital account
e. a deficit in the total balance of payments
QUESTION 2As the interest rate increases, the opportunity cost of
a. both c and e are correct
b. past consumption decreases
c. saving increases
d. current consumption increases
e. borrowing decreases
QUESTION 3Utopia would be a debtor nation
a. if consumers in other countries bought goods and services from Utopia
b. only if it had a deficit in its current account
c. only if it had a deficit in its balance of goods and services
d. if it had a deficit in its balance of trade
e. if it had a deficit after adding together the balances in both its current account and its capital account
QUESTION 4As the interest rate increases, consumers will tend to increase their amount of saving due to
a. increased profit
b. their greater reliance on borrowing
c. the lower opportunity cost of current consumption
d. diminishing marginal utility
e. the higher opportunity cost of current consumption
QUESTION 5Which of the following components of the U.S. balance of payments includes direct investment by Americans in foreign securities?
a. U.S. official reserve assets
b. the capital account
c. the current account
d. U.S. government assets abroad
e. merchandise trade balance
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