A Change in Fiscal Policy Will Affect the Current Account

question 17

Multiple Choice

A change in fiscal policy will affect the current account so long as

• A) neither private savings nor investment responds to the change in fiscal policy.
• B) both private savings and investment responds to the change in fiscal policy.
• C) private savings does respond but investment does not respond to the change in fiscal policy.
• D) private savings does not respond but investment does respond to the change in fiscal policy.
• E) there is an investment boom caused by high interest rates.

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Definitions:

Stimulus

is any object or event that elicits a sensory or behavioral response in an organism.

Absolute Threshold

The minimum intensity of a stimulus required to be correctly detected at least 50% of the time.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time, reflecting the lowest level of sensory input that is perceptible.

Difference Threshold

The minimum difference in stimulation required to distinguish between two stimuli.