Due to Macroeconomics Interdependence Between Large Countries, the Effect of a Permanent

question 37

Multiple Choice

Due to macroeconomics interdependence between large countries, the effect of a permanent fiscal expansion by Home is as follows: Home output

• A) falls, Home's currency appreciates, Foreign output rises.
• B) rises, Home's currency appreciates, Foreign output rises.
• C) rises, Home's currency depreciates, Foreign output rises.
• D) rises, Home's currency appreciates, Foreign output decreases.
• E) falls, Homes currency depreciates, Foreign output rises.

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Definitions:

Incremental Costs

The additional costs incurred when a business increases its level of activity or output, also known as marginal cost.

Additional Revenues

Income received that is over and above the main or expected sources of revenue for a business or an organization.

Direct Material

Raw materials that are directly attributable to the production of goods, essential in determining the cost of goods sold.

Direct Labor

Direct Labor refers to the work of employees that is directly associated with the production of goods or the provision of services, distinguishable as wages for hands-on work.