If a Government Started with a Deficit and Moved to a Surplus

question 1

Multiple Choice

If a government started with a deficit and moved to a surplus, which statement would best describe the effects of these changes?

• A) Domestic investment and the real exchange rate would rise.
• B) Domestic investment and the real exchange rate would fall.
• C) Domestic investment would rise, and the real exchange rate would fall.
• D) Domestic investment would fall, and the real exchange rate would rise.

---

Definitions:

Californios

The Hispanic residents of California before it became part of the United States, who were the original landowners and residents of the region when it was under Spanish and then Mexican rule.

Epidemic Disease

A disease outbreak that affects a large number of people within a community, population, or region over a short period.

Landholdings

Owned plots of land, varying in size and use, that can be agricultural, commercial, residential, or for conservation.

Illegal Squatting

Refers to the occupation of land or property without the permission of the owner or legal authority.