The Equation NX = S + (TA - G -

question 41

Multiple Choice

The equation NX = S + (TA - G - TR) - I implies that

• A)there is always a close correlation between the government budget deficit and the trade deficit
• B)if national saving increases relative to domestic investment, the trade deficit will decrease
• C)a reduction in the government budget deficit is likely to raise the level of saving and/or worsen the trade deficit
• D)an increase in government spending will stimulate exports
• E)a tax decrease can help to create a trade surplus