How Might a Budget Deficit Affect the Balance of Trade

question 151

Multiple Choice

How might a budget deficit affect the balance of trade?

• A)A budget deficit raises interest rates,which raises exchange rates and increases the balance of trade.
• B)A budget deficit raises interest rates,which raises exchange rates and reduces the balance of trade.
• C)A budget deficit reduces interest rates,which raises exchange rates and reduces the balance of trade.
• D)A budget deficit reduces interest rates,which reduces exchange rates and reduces the balance of trade.

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Definitions:

Electrical Loads

Devices or components in an electrical circuit that consume electric power, such as lights, appliances, and machines.

Average Accounting Return

A measure of the profitability of an investment, calculated as the average annual net income divided by the average investment.

Time Value

The concept in finance that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Calculation

The process of determining a numerical result based on mathematical operations or algorithms.