An Effective Policy to Reduce a Trade Deficit in a Small

question 57

Multiple Choice

An effective policy to reduce a trade deficit in a small open economy would be to:

• A) increase tariffs on imports.
• B) impose stricter quotas on imported goods.
• C) increase government spending.
• D) increase taxes.

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Definitions:

Withheld

Refers to the portion of an individual’s earnings that is not directly paid to the individual by the employer, because it is set aside for purposes such as tax payments.

Times Interest Earned Ratio

A financial metric used to determine how easily a company can pay interest on outstanding debt with its before-tax earnings.

Interest Expense

The expense an entity faces for using borrowed capital, usually shown on the income statement.

Wage Bracket Withholding Table

A chart used by employers to determine the amount of tax to withhold from an employee’s paycheck based on their earnings and tax bracket.