Other things equal, which of the following is most likely to decrease a countrys trade deficit？
A. Increase its capital account surplus.
B. Decrease expenditures relative to income.
C. Decrease domestic saving relative to domestic investment.
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In which type of regional trade agreement are economic policies conducted independently by the member countries, while labor and capital are free to move among member countries？
A. Free trade area.
B. Common market.
C. Economic union.
A current account deficit is most likely to decrease as a result of an increase in:
A. Domestic savings.
B. Private investment.
C. The fiscal budget deficit.
A decrease in the target U.S. federal funds rate is least likely to result in:
A proportionate decrease in long-term interest rates.
B. An increase in consumer spending on durable goods.
C. Depreciation of the U.S. dollar on the foreign exchange market.
Which of the following statements about international trade is least accurate？ If two countries have different opportunity costs of production for two goods, by engaging in trade:
A. Each country gains by importing the good for which it has a comparative advantage.
B. Each country can achieve a level of consumption outside its domestic production possibility frontier.
C. The low opportunity cost producer of each good will export to the high opportunity cost producer of that good.
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