Refer to Figure 2 Below

question 5

Multiple Choice

Refer to figure 2 below. Which of the following statements is NOT true? Figure 2

• A) The upward shift in the expenditure line from C+I+G+(X-
• M)₁ to C+I+G+(X-
• M)₂ and consequent increase in national income would result from a reduction in interest rates.
• B) The upward shift in the expenditure line from C+I+G+(X-
• M)₁ to C+I+G+(X-
• M)₂ and consequent increase in national income would result from an increase in exports.
• C) The upward shift in the expenditure line from C+I+G+(X-
• M)₁ to C+I+G+(X-
• M)₂ and consequent increase in national income would result from a reduction in saving.
• D) The upward shift in the expenditure line from C+I+G+(X-
• M)₁ to C+I+G+(X-
• M)₂ and consequent increase in national income would result from a reduction in government expenditure.

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Definitions:

Trade Deficit

A condition where a nation's expenditures on imported goods surpass its income from exports, resulting in a greater outflow of funds than inflow.

Trade Surplus

A situation where a country exports more goods and services than it imports, resulting in a positive balance of trade.

Net Exports

The value of a country's total exports minus the value of its total imports, reflecting the balance of trade.

Exchange Rates

The worth of a single currency when converted into another, showing the amount of one currency that can be swapped for a different one.