An Increase in the Federal Budget Deficit

question 51

Multiple Choice

An increase in the federal budget deficit:

• A)only occurs when there is a deficit in the balance of trade.
• B)creates deflation.
• C)decreases aggregate demand.
• D)decreases the aggregate quantity demanded along a stationary aggregate demand curve.
• E)raises the equilibrium level of output and employment.

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Definitions:

European Put Option

A financial contract that gives the holder the right, but not the obligation, to sell an underlying asset at a specified price on the expiration date.

Exercise Price

The price at which the holder of an option can buy (for a call option) or sell (for a put option) the underlying security.

Currency-Translated Options

Options that involve the right to buy or sell a specified amount of one currency for another at a predetermined exchange rate during a specified period.

Foreign Currency

The money or currency used in a country different from one's own, involved in international trading and investment.