A Government Budget Deficit

question 105

Multiple Choice

A government budget deficit

• A)increases both net capital outflow and net exports.
• B)decreases both net capital outflow and net exports.
• C)increases net capital outflow and decreases net exports.
• D)decreases net capital outflow and increases net exports.

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Definitions:

Consumables

Items or products that are intended to be used up and replaced.

Inflationary Premium

The component of interest rates or yields on financial instruments that compensates investors for the anticipated erosion of purchasing power due to inflation.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.

Loanable Funds

Financial resources available for borrowing, often within the context of a market setting interest rates.