Expansionary Fiscal Policy in an Open Economy

question 11

Multiple Choice

Expansionary fiscal policy in an open economy

• A)leads to a balance of trade surplus.
• B)decreases America's capital account surplus and the current account deficit by the same amount.
• C)increases both America's capital account surplus and current account deficit by equal amounts.
• D)increases America's capital account surplus more than it increases the current account deficit.

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Definitions:

Uncertainty

A condition where the outcome of an event or the effect of a decision is unknown.