Which of the Following Would Not Be a Consequence of an Increase

question 26

Multiple Choice

Which of the following would not be a consequence of an increase in the U.S.government budget deficit?

• A)U.S.interest rates rise
• B)U.S.net capital outflow falls
• C)the real exchange rate of the U.S.dollar depreciates
• D)the U.S.supply of loanable funds shifts left

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Definitions:

Liquidity Risk Premium

The additional return demanded by investors for holding assets that are not easily convertible into cash without a significant loss in value.

Savings Equals Investment

A principle in macroeconomics indicating that within an economy, total savings in a period must equal total investments.

Economic Principle

A fundamental concept or guiding theory that forms the basis of economic analysis and decision-making.

Bond Price Changes

Variations in the market price of bonds, influenced by interest rate movements and other factors.