The Relation S + (T -G)= I + NX Describing

question 50

Multiple Choice

The relation S + (T -G) = I + NX describing the equilibrium of an economy explicitly demonstrates

• A)deficit spending by the government reduces either investment and/or net foreign investment.
• B)deficit spending reduces private saving (assuming net foreign investment remains unchanged).
• C)as private saving increases net foreign investment must decrease,exports decline.
• D)as private saving increases the deficit must decline if investment decreases.

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Definitions:

Excess Capacity

A situation where a business produces less than it is actually capable of because there is not enough demand for its product or service.

Output Contract

A legal agreement in which a seller agrees to sell all the production to a particular buyer, who in turn agrees to purchase the entire output.

Needs Contract

A contract or agreement tailored to address and fulfill specific needs of the parties involved.

Good Faith

Acting with honest intentions without seeking to take unfair advantage in a transaction or situation.