In Considering the Net Effect of Expansionary Fiscal Policy on the Trade

question 91

Multiple Choice

In considering the net effect of expansionary fiscal policy on the trade deficit, the:

• A)income effect offsets the price effect.
• B)price effect offsets the income effect.
• C)income and price effects work in the same direction, so the trade deficit is decreased.
• D)income and price effects work in the same direction, so the trade deficit is increased.

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Definitions:

Observations

Specific instances of data collected or noticed during an experiment or study.

Quadratic Model

A statistical model used to describe a relationship between a response variable and one or more predictor variables where the relationship is parabolic.

Interaction Term

An additional term in a statistical model that represents the effect on the response variable of combining two or more variables.

SSE

Sum of Squared Errors, a measure of the discrepancy between the data and an estimation model.