Assume That an Increase in Costa Rica's Government Budget Deficit

question 72

Multiple Choice

Assume that an increase in Costa Rica's government budget deficit reduced desired national saving by 10 million colon.Assuming Costa rice is a small open economy,you would expect the government's action to

• A)increase the current account balance by exactly 10 million colon.
• B)increase the current account balance by less than 10 million colon.
• C)reduce the current account balance by exactly 10 million colon.
• D)reduce the current account balance by more than 10 million colon.

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Definitions:

Government Intervention

Actions taken by a government to influence or directly regulate various activities within its economic systems.

Taxes

Required financial dues or other levy types enforced on taxpayers by governmental institutions, intended to support government funding and multiple public spending purposes.

Average Price Level

An index that summarizes prices across a variety of goods and services within an economy at a given time, providing a snapshot of overall price trends.

Imports

Goods or services brought into one country from another for the purpose of trade.