If Net Exports Is a Negative Number, the Government Sector

question 378

Multiple Choice

If net exports is a negative number, the government sector must ________ if the private sector is in a ________.

• A) run a surplus; surplus
• B) equal zero; deficit
• C) run a deficit; surplus
• D) The statement errs because the accounts are not related.

---

Definitions:

Leverage Ratio

The ratio of assets to bank capital.

Reserves

Assets held by a bank or financial institution, often to meet regulatory requirements or as a safeguard against potential crises.

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Money Supply

The overall pool of financial assets in an economy at a given stage.