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Practice mode Budget Deficits And The Trade Balance

An export subsidy should have the opposite effect to which of these?

Correct answer A. A tariff

Explanation

A tariff makes imports dearer to encourage domestic production, while an export subsidy encourages foreign sales; both raise net exports at a given exchange rate.

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Question 01 Budget Deficits And The Trade Balance

Which statement about the loanable funds market is false?

Correct answer D. An increase in a country's net capital outflow shifts the supply of loanable funds to the left

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Question 02 Budget Deficits And The Trade Balance

Which statement about the loanable funds market is correct?

Correct answer B. An increase in the government budget deficit shifts the supply of loanable funds to the left

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Question 03 Budget Deficits And The Trade Balance

What is the effect of an increase in Pakistan’s government budget deficit?

Correct answer A. It decreases Pakistan's net exports and net capital outflow by the same amount

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Question 04 Budget Deficits And The Trade Balance

What does the phrase ‘twin deficits’ refer to?

Correct answer D. A country's trade deficit and its government budget deficit

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