Are federal budget deficits related to trade deficits?
A. Yes. If U.S. consumers buy too many imported goods they don't have money to save and a budget deficit results.
B. Yes, but only if the quality of U.S. goods and services is deteriorating.
C. Yes. As deficit spending goes up, it is likely government borrowing will, too. Then foreign residents who lend funds to the U.S. government have less to spend on our goods, so U.S. exports will fall.
D. No. The budget deficit is entirely a domestic matter while the trade deficit only affects U.S. citizens who travel abroad.
Answer: C
You might also like to view...
In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the ________ curve shifts ________ because ________
A) aggregate supply; leftward; the money wage rate rises B) aggregate supply; rightward; the money wage rate falls C) aggregate demand; rightward; the money wage rate falls D) aggregate demand; leftward; the money wage rate rises E) potential GDP; leftward; the money wage rate falls
Which of the following would cause the money supply in the United States to expand?
a. A decrease in reserve requirements. b. An increase in the discount rate. c. The sale of U.S. government bonds by a Federal Reserve bank. d. An increase in the world supply of gold.
To maximize satisfaction, the consumer must reach the lowest indifference curve that can be reached with a given level of income
a. True b. False Indicate whether the statement is true or false
With the invention of banking, one important aspect of money was that
A. banks have some discretion over the money supply. B. banks have complete control over the money supply. C. governments lost all control over the money supply. D. individuals have no discretion over the money supply.