If the Budget Surplus Increases, Which of the Following Is

question 12

Multiple Choice

If the budget surplus increases, which of the following is likely to happen?

• A)imports will increase more than exports
• B)exports will increase more than imports
• C)private domestic saving will increase more than private domestic investment
• D)private domestic investment will remain the same while private domestic saving will increase
• E)private domestic investment will decrease

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Definitions:

Money Market Securities

Short-term financial instruments typically with high liquidity and minimal risk.

Capital Market Securities

Long-term financial instruments traded in capital markets, such as bonds, stocks, or debentures.

Liquid

Describes an asset that can be quickly converted into cash without significant loss of value or a market where such assets can be bought or sold with ease.

Financial Intermediaries

Institutions that facilitate the channeling of funds between savers and borrowers by intermediating financial transactions.