Assume the United States Is Currently Running a Current Account

question 32

Multiple Choice

Assume the United States is currently running a current account deficit.The most effective way of eliminating this current account deficit would be to temporarily ________ government purchases and ________ the domestic money supply.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

U.S. Treasury

The federal department responsible for managing government revenue, issuing currency, and executing fiscal policy in the United States.

Money Market Instrument

Short-term financial instruments that include treasury bills, commercial paper, and certificates of deposit, typically with high liquidity and low risk.

Government Bonds

Bonds issued by the U.S. Department of the Treasury.

U.S. Department of Treasury

A cabinet-level department of the federal government responsible for managing government revenue, producing currency, and implementing fiscal policies.