If a Government of a Country with a Zero Trade

question 49

Multiple Choice

If a government of a country with a zero trade balance increases its budget deficit,then the real exchange rate

• A)appreciates and there is a trade surplus.
• B)appreciates and there is a trade deficit.
• C)depreciates and there is a trade surplus.
• D)depreciates and there is a trade deficit.

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Definitions:

MR

Marginal Revenue, the additional income earned from selling one more unit of a good or service.

AVC

Average variable cost; the total variable costs divided by the quantity of output produced, illustrating cost per unit.

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor costs.