When capital is perfectly mobile, the BP schedule is:
A. a horizontal line
B. a vertical line
C. an upward-sloping line
D. an downward-sloping line
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The BP schedule is an upward-sloping line, because higher levels of income worsen the current account:
A. improve
B. worsen
C. improve or worsen
D. none
The global crisis which began in 2007, is partly the result of overlending and overborrowing.
Improvements in bank supervision and regulation in developing countries can be expected to reduce the frequency of financial crises.
The rescue activities of the IMF create moral hazard.