If a Small Open Economy Reduces Its Budget Deficit,the Result

question 35

Multiple Choice

If a small open economy reduces its budget deficit,the result will be

• A) a lower world real interest rate, but no change in the domestic real interest rate.
• B) a lower domestic real interest rate, but no change in the world real interest rate.
• C) lower domestic and world real interest rates.
• D) no change in either the domestic or world real interest rate.

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Definitions:

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Legal rights to access and obtain certain information, which could pertain to government data, workplace policies, or consumer products.

Decision-making Authority

The power or right vested in a particular position or role within an organization to make decisions affecting its operations or directions.

European Union

A political and economic union of 27 European countries that are located primarily in Europe, aimed at facilitating free movement of goods, services, and people.

Executive Body

A group or committee with the authority to make decisions and govern within an organization, institution, or government.