Consider an Open-Economy AD/AS Macro Model

question 1

Multiple Choice

Consider an open-economy AD/AS macro model.An expansionary fiscal policy will generally increase the government's budget ________ and also tends to ________ and thus ________ net exports.

• A)deficit; appreciate the currency; decrease
• B)surplus; depreciate the currency; increase
• C)deficit; appreciate the currency; increase
• D)surplus; appreciate the currency; decrease
• E)deficit; depreciate the currency; decrease

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Definitions:

Supply Shifts

Changes in the supply curve of a product or service due to external factors, leading to a different quantity supplied at each price level.

Equilibrium Price

The price at which the quantity of a good or service supplied equals the quantity demanded in a market, leading to market stability.

Bluetooth Headsets

Wireless earpieces that use Bluetooth technology to connect to various devices, enabling hands-free calling or listening to music.

Complements

refers to goods or services that are used together, where an increase in the price of one leads to a decrease in the demand for the other.