If the Budget Deficit Increases,then

question 45

Multiple Choice

If the budget deficit increases,then

• A)an increase in the interest rate increases net capital outflow.
• B)an increase in the interest rate decreases net capital outflow.
• C)a decrease in the interest rate increases net capital outflow.
• D)a decrease in the interest rate decreases net capital outflow.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.

P = MC

An economic principle stating that the optimal level of output occurs when the price (P) equals marginal cost (MC), guiding firms in perfect competition on production decisions.

Perfect Competition

A market structure characterized by a large number of small firms, homogenous products, free entry and exit, and perfect information, leading to firms being price takers.

Marginal Cost

The expense incurred from manufacturing an additional unit of a product.