Assume That a Country Is at Full Employment and Wants

question 6

Multiple Choice

Assume that a country is at full employment and wants to improve its trade deficit by
Devaluing its currency.Using the absorption approach which of the following methods will improve the trade deficit?
I.Increase government spending
II.Increase consumption taxes
III.Increase income taxes

• A) I and II
• B) I and III
• C) II and III
• D) None

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Definitions:

Account

A record summarizing the financial transactions related to a particular aspect of a business's financial activities.

Compounded Annually

A method of calculating interest where the interest earned each year is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.

Savings Account

A bank account where money can be deposited to earn interest over time.

Deposited

The act of placing money into a financial institution or account for safekeeping or to earn interest.