Use the Following to Answer Questions

question 143

Multiple Choice

Use the following to answer questions:
Figure: Foreign Trade
-(Figure: Foreign Trade) Refer to the figure. What quantity would be traded in the absence of any international trade?

• A) 600
• B) 1,400
• C) 1,000
• D) 800

---

Definitions:

Equilibrium GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand, indicating a stable economy with no tendency for change in the price level or output.

Multiplier

Any change in spending (C, I, or G) will set off a chain reaction leading to a multiplied change in GDP. Equation is 1/(1 - MPC).

Federal Budget Deficit

A situation where the government's expenditures exceed its revenues over a specific fiscal period.

Real Interest Rates

The interest rate adjusted for inflation, representing the true cost of borrowing and the real yield to investors.