In a Two-Good,two-Period Model with Trade,an Increase in Domestic Government

question 35

Multiple Choice

In a two-good,two-period model with trade,an increase in domestic government spending

• A) increases domestic output and increases the current account surplus.
• B) increases domestic output and decreases the current account surplus.
• C) decreases domestic output and increases the current account surplus.
• D) decreases domestic output and decreases the current account surplus.
• E) increases domestic output with no change in the current account surplus.

---

Definitions:

Trade or Business Expenses

Trade or business expenses are the costs of carrying on a trade or business, and these expenses are usually deductible if the business operates to make a profit.

For AGI Deduction

For AGI deductions, also known as above-the-line deductions, reduce gross income to arrive at adjusted gross income and can include expenses such as certain business expenses, alimony payments, and contributions to retirement accounts.

Material Amount

A sum of money that is large enough to influence decisions or the perception of a company's financial performance.

Sole Proprietorship

A business structure where a single individual owns and operates the business, bearing full responsibility for its debts and obligations.