The Current Account Deficit

It has already been mentioned that there are groups willing to lend to us so we can continue our consumption binge. This dilemma adds a new economic concept to our equation. A country can now have imports and exports (NE) into our economy, that is, GDP=C+I+G+NE. It becomes a little more complex when one takes into account the federal government's borrowing of funds to operate, which also falls into this current account category.

The 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.The Current Account Deficit

It has already been mentioned that there are groups willing to lend to us so we can continue our consumption binge. This dilemma adds a new economic concept to our equation. A country can now have imports and exports (NE) into our economy, that is, GDP=C+I+G+NE. It becomes a little more complex when one takes into account the federal government's borrowing of funds to operate, which also falls into this current account category.

The 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.

Question 1

1. Suppose the supply for product A is perfectly elastic. If the demand for this product intensification will be__________

2. If the coefficient of revenue elasticity of demand is sophisticated than 1 and the revenue upsurges, the share of expenditures for commodity X in entire expenditure will be determined by______________

3. When the demand for agricultural foodstuffs is unbendable______________

4. For a rational consumer who has to indicate between two goods in the background of budget restraints, the price change of one of the goods, caeteris paribus, will determine____________

5. The price of the product A was reduced from 100 to 90 lei and, as a result, the quantity demanded has increased from 70 to 75 units. The demand is:

6. Is it true or false that for a company whose production process involves making two goods, one main and the other secondary, if the price of the main good increases, - caeteris paribus - the supply on the secondary good`s market will increase (and vice versa). Explain your answer

7. If the petition curve for product A moves to the right, and the worth of product B diminutions, it can be concluded that:

8. Suppose the price of a good decreases by 10% and the quantity demanded for a certain period of time increases by 15%. In these conditions:

9. If a price increase of 50% results in an increase in the quantity supplyed of an economic good from 10 to 20 pieces, calculate the coefficient of price elasticity of supply

10. The total utility coincides with the marginal utility: