An Increase in the Federal Budget Deficit

question 51

Multiple Choice

An increase in the federal budget deficit:

• A)only occurs when there is a deficit in the balance of trade.
• B)creates deflation.
• C)decreases aggregate demand.
• D)decreases the aggregate quantity demanded along a stationary aggregate demand curve.
• E)raises the equilibrium level of output and employment.

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Definitions:

Tariffs

Taxes imposed by a government on imported or exported goods, usually to protect domestic industries or to generate revenue.

Foreign Products

Goods or services produced in one country and sold in another, outside of their country of origin.

Duties

Taxes imposed on the import and export of goods.

Protective Tariff

A tax imposed on imports to protect domestic industries from foreign competition by making imported goods more expensive.