If a Government Started with a Budget Deficit and Moved

question 153

Multiple Choice

If a government started with a budget deficit and moved to a surplus,domestic investment

• A)and the real exchange rate would rise.
• B)and the real exchange rate would fall.
• C)would rise and the real exchange rate would fall.
• D)would fall and the real exchange rate would rise.

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Definitions:

Income Tax Expense

The cost incurred by businesses or individuals due to income taxes.

Investing Activities

Transactions related to the purchase or sale of long-term assets and investments, which are part of the cash flow statement indicating how cash is invested.

Financing Activities

Activities involving the acquisition of funds and the settlement of obligations with investors, such as the issuance of stocks and bonds, and the distribution of dividends.

Direct Method

A cash flow statement approach that lists major classes of gross cash receipts and payments, providing a clear view of actual cash flow.