Question

<pre class=”ql-syntax”>Which <span class=”hljs-keyword”>of</span> the

following statements <span class=”hljs-keyword”>is</span> correct <span class=”hljs-keyword”>for</span> an open economy with a trade deficit? The trade deficit must be offset <span class=”hljs-keyword”>by</span> a positive net capital outflow. The trade deficit cannot last <span class=”hljs-keyword”>for</span> very many years. None <span class=”hljs-keyword”>of</span> the above answers <span class=”hljs-keyword”>is</span> correct. The trade deficit implies that the country<span class=”hljs-string”>’s national saving is less than domestic investment.  A monetary policy will increase GDP in the short run if: personal savings decrease to finance future consumption. interest rates increase, encouraging more saving. personal savings increase to finance present consumption. interest rates decrease, encouraging more investment.  </span></pre>

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