In a Small Open Economy, Starting from a Position of Balanced

question 102

Multiple Choice

In a small open economy, starting from a position of balanced trade, if the government increases the income tax, this produces a tendency toward a trade ______ and ______ net capital outflow.

• A) deficit; negative
• B) surplus; positive
• C) deficit; positive
• D) surplus; negative

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Definitions:

Recognize the Loss

The accounting practice of formally acknowledging that a financial asset has decreased in value, typically realized through a transaction or assessment.

College Education

The advanced level of learning obtained at universities or colleges, typically leading to a degree.

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Decision Maker

An individual or group responsible for making choices after considering the consequences of various actions.