Which of the Following Would Not Be a Consequence of an Increase

question 371

Multiple Choice

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

• A)The U.S. trade balance rises.
• B)The U.S. interest rate rises.
• C)Domestic investment in the U.S. falls.
• D)The real exchange rate of the U.S. dollar appreciates.

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Definitions:

Interest

The cost of borrowing money or the payment received for depositing money, usually expressed as a percentage of the principal over a period of one year.

Simple Interest Rate

The percentage of interest calculated only on the principal amount, not including any interest from previous periods.

Investment

The allocation of resources (such as time, money, or effort) in the expectation of generating a future return or profit.

Interest

The expense associated with taking out a loan, usually conveyed as a yearly percentage of the total loan value.