A Reduction in the Budget Deficit Can Be Reflected in

question 35

Multiple Choice

A reduction in the budget deficit can be reflected in

• A)a reduction in private saving.
• B)an increase in investment.
• C)an increase in net exports.
• D)all of the above
• E) none of the above

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Definitions:

Homothetic Preferences

Consumer preferences where if a bundle of goods is preferred to another, then any scaled up or down version of the bundle is also preferred based on the proportion of goods, maintaining consumption patterns.

Prices Double

A situation where the prices of goods or services increase to twice their original amount.

Quasilinear Preferences

Consumer preferences where the utility function is linear in one of the goods, indicating constant marginal utility for that good.

Income Offer Curve

A graphical representation showing how an individual's optimal choice of goods to consume changes as their income changes.