Increases in Government Spending Financed Through Additional Borrowing Will Typically

question 240

Multiple Choice

Increases in government spending financed through additional borrowing will typically have the largest impact on aggregate demand when:

• A) the stock market and other private investments are booming.
• B) increased uncertainty causes a decrease in private sector investing.
• C) interest rates are high.
• D) private sector spending is high.

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Definitions:

Speculator

Someone who buys or sells foreign exchange in hopes of profiting from fluctuations in the exchange rate over time.

Exchange Rate

How much one currency is worth in terms of crossing over to another currency.

Mexican Demand Curve

A graphical representation showing the quantity of goods that consumers in Mexico are willing and able to purchase at various prices.

U.S. Dollars

The official currency of the United States, widely used as a standard of exchange in international markets.