The Net Export Effect Works Through International Trade To

question 34

Multiple Choice

The net export effect works through international trade to:

• A)increase the effectiveness of expansionary and contractionary fiscal policy.
• B)decrease the effectiveness of expansionary and contractionary fiscal policy.
• C)decrease the effectiveness of expansionary fiscal policy and increase the effectiveness of contractionary fiscal policy.
• D)increase the effectiveness of expansionary fiscal policy and decrease the effectiveness of contractionary fiscal policy.

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Definitions:

Mercantilism

A trade theory which suggests that trade generates wealth for a country with a trade surplus, with emphasis on colonization and military conquest.

Interventionist Trade Theory

A theory suggesting that government intervention in international trade through policies and regulations is necessary to correct market failures and protect domestic industries.

Trade Surplus

Occurs when a country's exports exceed its imports, indicating a positive balance of trade.

Neo-Mercantilism

A trade theory which suggests that trade generates wealth for a country with a trade surplus, with emphasis on rapid economic development.