The Proposition That Increases in Government Budget Deficits in an Open

question 14

Multiple Choice

The proposition that increases in government budget deficits in an open economy tend to crowd out net exports relies on the idea that

• A)government demand for labour tends to create manpower shortages in export industries.
• B)much government expenditure is typically directed towards imported goods and services.
• C)the resulting increase in interest rates attracts an inflow of financial capital that causes the currency to appreciate.
• D)the rise in private-sector wealth associated with the rising stock of bonds leads to a fall in the saving rate and therefore a current account deficit.
• E)there is downward pressure on interest rates that causes the currency to depreciate.

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Definitions:

Socialization

The process of learning socially acceptable behaviors, attitudes, and values.

Positive Parenting

A parenting approach centered on understanding, support, and encouragement, focusing on positive reinforcement rather than punishment.

Authoritarian

Relating to a style of governance or leadership that emphasizes strict obedience to authority at the expense of personal freedom, or a personality type that favors such an approach.

Nativist Position

The perspective in cognitive development that emphasizes the role of genetic inheritance and biology in learning and behavior, often opposing the notion that understanding comes solely from experience or environment.