Which List Contains Only Things That Decrease When the Budget

question 48

Multiple Choice

Which list contains only things that decrease when the budget deficit of the Canadian government increases?

• A) Canadian net exports, national saving, and net capital outflow
• B) Canadian supply of loanable funds, the real exchange rate of the dollar, and domestic investment
• C) Canadian imports, interest rates, and the real exchange rate of the dollar
• D) interest rate, net exports, and the quantity demanded for loanable funds for domestic investment

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Definitions:

Inflation Tax

An implicit tax that results from the erosion of purchasing power due to inflation, effectively reducing the real value of money held by the public.

U.S. Government Revenue

The total income received by the government from taxes and non-tax sources like tariffs, fees, and government-owned enterprises income.

Quantity Theory

An economic theory that links the quantity of money in an economy to the level of prices of goods and services.

Money Supply

At a specific instant, the total monetary assets within an economy, including coins, cash, and the amounts present in checking and savings accounts.