If in an Open Economy a Country Imports More Than

question 187

Multiple Choice

If in an open economy a country imports more than it exports and the government budget deficit increases, interest rates will _____ and the amount of borrowing will _____.

• A) increase; increase
• B) decrease; increase
• C) increase; change unpredictably
• D) change unpredictably; increase

---

Definitions:

Transnational Companies

Businesses that operate across national borders, maintaining significant operations in multiple countries.

Political Implications

The potential effects or consequences that political decisions, events, or environments have on an individual, organization, or country.

Economic Implications

The financial or economic consequences or outcomes resulting from a specific action, policy, or event.

Tax Implications

The effects of financial decisions or transactions on the amount of taxes owed to government authorities.