In an Open Economy,a Reduction in Government Spending Will Cause

question 8

Multiple Choice

In an open economy,a reduction in government spending will cause

• A)an increase in domestic output.
• B)an increase in imports.
• C)an increase in net exports.
• D)all of the above
• E) none of the above

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Contribution Margin Ratio

The percentage of each sales dollar remaining after deducting variable costs, indicating how much contributes to covering fixed costs and generating profit.

Operating Income

Income generated from a company's regular business operations, excluding expenses such as taxes and interest charges.

Variable Costs

Expenses that vary directly with the level of production or sales, such as materials and labor.