If a Government Increases Its Budget Deficit, Which Statement Would

question 22

Multiple Choice

If a government increases its budget deficit, which statement would best predict the effects?

• A) Interest rates rise, and the trade balance moves toward surplus.
• B) Interest rates rise, and the trade balance moves toward deficit.
• C) Interest rates fall, and the trade balance moves toward surplus.
• D) Interest rates fall, and the trade balance moves toward deficit.

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Definitions:

Framing Effects

The phenomenon where people's decisions and preferences can be significantly influenced by the way information, choices, or situations are presented.

Poor Affective Forecasting

The tendency of individuals to mispredict their future feelings in response to events or outcomes.

Many Options

The availability of a wide range of choices or alternatives.

Special Topping Combinations

Unique or uncommon assortments of toppings, particularly in the context of food such as pizza or ice cream.