HELLO TUTORS USE THE CASE STUDY TO ANSWER THE QUESTION

he current account deficit is about 7 percent of our GDP-more than double the previous modern record of 3.4 percent in the middle 1980s. Back then, the value of the U.S. dollar dropped by 50 percent against the other major currencies over a three-year period from 1985 to 1987 as a result. The Euro could go as high as US$2.00 from the approximate US$1.47 of early 2008.

Many, however, including our current Federal Reserve Chairman Ben Bernanke, do not believe that this high current account deficit will be that harmful,[17]largely because of the capital account (see explanation below).[18]In economic reality, the capital account is more interesting than the current account since it is the account that takes down economies. Since trade deficits (current accounts) are traditionally balanced with surplus capital accounts, the scales will tip against everyone if the capital account collapses. This is even more difficult to forecast since capital markets are the result of expectations, not realities.

Nonetheless, most agree that this high deficit level is unsustainable. Further, economists agree that it is possible that the current account deficit could be the single greatest threat to the continued prosperity and stability of the United States and world economies.

Lou Jiwei, Chief Investment Officer of China, is perhaps the most influential person in the U.S. economy today. He oversees the $1,250 trillion or so Chinese investment fund, which mostly consists of U.S. treasuries. Because he is investing heavily in the U.S. government (about two-thirds of the fund), we have very low interest rates. This is good for the U.S. as long as the positive economic party continues. But what happens if the music stops?[19]

Many do not believe the Chinese will cause a major disruption to the world financial markets. The author expects very little from them until after the Beijing 2007 Olympic Games. After the Olympics, many anticipate changes more in line with their recent $3 billion investment in the Blackstone Group, which purchases U.S public companies and privatizes them. The Chinese see this as a logical first step considering the xenophobic view from America when the Chinese tried to buy Union Oil Company of California directly.[20]

Question 11

1.The economic badly-behaved has, at its fundamental,_____- the issue of high-quality because_____________

2.The basic economic badly-behaved is that

3.The field of Economics is the study of__________-

4.An economic good, as condifered in the filed of economic can be describe as_________

5.A family inherited 15,000 from a long lost aunt. They are weighing up whether to buy a new car or go on a trip to Australia for a month. They decide to go to Australia. The opportunity cost of this decision is _____________

6.The production possibility curve can be used to illustrate each of the following, with the exception of______________

7.The production possibility diagram below shows various output choices P, Q, R, S and T.________________ The production possibility diagram below shows various output choices P, Q, R, S and T.

8.Referring to the production possibility diagram below, at which point is there unemployment in the economy?

9.Referring to the production possibility diagram below, at which point is there unemployment in the economy?

10.. Which one of the following statements is false? At all points on the production possibility curve