When Income Levels in the Rest of the World Increase

question 93

Multiple Choice

When income levels in the rest of the world increase, what is the effect on the home TB?

• A) It decreases because of expenditure switching.
• B) It decreases because of an increase in imports.
• C) It increases because of an increase in exports.
• D) It increases because of expenditure switching.

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Definitions:

Marketable Securities

Financial instruments that can be easily sold or converted to cash without a significant loss in value.

Restrictive Policy

A policy designed to limit or control certain actions, often used in the context of monetary or fiscal policy to control inflation or regulate the economy.

Frequent Cash-Outs

Regular transactions where cash is withdrawn from a company's account, potentially affecting its liquidity or cash reserves.

Restrictive Policy

A financial policy or strategy that aims to limit credit expansion and investment, often to curb inflation or stabilize economic growth.