If a Government Increases Its Budget Deficit, Which of the Following

question 170

Multiple Choice

If a government increases its budget deficit, which of the following best predicts the effects?

• A)The real exchange rate appreciates, and the trade balance moves toward surplus.
• B)The real exchange rate appreciates, and the trade balance moves toward deficit.
• C)The real exchange rate depreciates, and the trade balance moves toward surplus.
• D)The real exchange rate depreciates, and the trade balance moves toward deficit.

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Definitions:

George Pullman

An American engineer and industrialist who designed and manufactured the Pullman sleeping car and founded a company town for his workers, contributing to the development of labor relations in the United States.

Model Factory Town

A planned community designed primarily for the housing of factory workers and the functionality of a particular industry, promoting efficiency and productivity.

Industrialization

The transformation of an economy from being predominantly agricultural to one that is centered on manufacturing goods, which results in technological advancements and the growth of cities.

Chicago

A major city in the United States, located in Illinois, known for its significant historical and cultural contributions and as a hub for commerce and transportation.