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National Income and Current Account Quiz

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National Income and Current Account Quiz

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Questions and Answers

What does the simple open-economy Keynesian model consist of?

Consumption spending, wage rate fluctuations, and export spending

Consumption spending, investment spending, government spending, and export spending (correct)

Interest rate changes, government spending, and real income fluctuations

Investment spending, import spending, and aggregate demand

In the Keynesian income model, what is the focus on?

Desired expenditures and monetary considerations

Aggregate spending and price changes

Real income movements and interest rate changes

Aggregate spending and real income movements (correct)

What must be subtracted from desired expenditures to obtain the demand for home goods and services in the open-economy Keynesian model?

Import spending (correct)

Fluctuations in aggregate demand

Interest rate changes

Government spending

Why is the economy assumed to not be at full employment in the Keynesian income model?

Because of downward money wage rigidity Signup and view all the answers

What is assumed to be constant in the Keynesian income model?

Prices and wage rate Signup and view all the answers

How does the incorporation of a foreign trade sector into a Keynesian income model impact the domestic saving/investment relationship and the multiplier?

It destabilizes the domestic saving/investment relationship and has an unpredictable impact on the multiplier Signup and view all the answers

What did economist Catherine Mann suggest about the relationship between the U.S. economic boom and its trade deficit?

The economic boom will widen the U.S. trade deficit Signup and view all the answers

What would lead to a temporary narrowing of the U.S. trade gap, according to economist Catherine Mann?

A decrease in the value of the dollar Signup and view all the answers

Based on economist Catherine Mann's statement, what is expected if there are structural reforms encouraging faster global growth and boost in U.S. household savings rates?

The U.S. trade deficit will stabilize Signup and view all the answers

What does economist Catherine Mann suggest is required to put the U.S. current account and trade deficits back on a sustainable path?

Structural reforms encouraging faster global growth and boost in U.S. household savings rates Signup and view all the answers