If the Government of a Small Open Economy Wishes to Reduce

question 132

Multiple Choice

If the government of a small open economy wishes to reduce a trade deficit, which policy action will be successful in achieving this goal?

• A) increasing taxes
• B) increasing government spending
• C) increasing investment tax credits
• D) imposing protectionist trade policies

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Definitions:

Relative Poverty

A condition where individuals lack the minimum amount of income needed in comparison to the average standard of living in their society.

Minimum-Wage Jobs

Positions that pay the lowest legal hourly rate employers are permitted to pay workers, often in unskilled or service-oriented fields.

Low-Income Cutoff

Is Statistic Canada’s term for the income threshold below which a family devotes at least 20 percent more of its income to the necessities of food, shelter, and clothing than does an average family.

Market Basket

A selected set of goods and services used to track the price level or cost of living over time.