In a Small Open Economy, Starting from a Position of Balanced

question 10

Multiple Choice

In a small open economy, starting from a position of balanced trade, if the government increases domestic government purchases, this produces a tendency toward a trade ______ and ______ net capital outflow.

• A) deficit; negative
• B) surplus; positive
• C) deficit; positive
• D) surplus; negative

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Definitions:

Negative Attitude

A general disposition of dissatisfaction or pessimism towards people, situations, or ideas.

Farmer's Market

A designated space where local farmers and vendors sell fresh produce, meats, cheeses, and other artisan goods directly to consumers, often fostering community engagement and supporting local agriculture.

Exceeded Expectation

Surpassing the anticipated level of performance or outcome, delivering results beyond what was originally forecasted or projected.

Service

Any intangible offering that involves a deed, performance, or effort that cannot be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer.