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Practice mode 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

Explanation

In the open-economy model, net capital outflow is part of the demand for loanable funds, not the supply, so a rise in it shifts demand right rather than supply left.

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More Budget Deficits And The Trade Balance questions

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Question 01 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

Open question
Question 02 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

Open question
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Question 03 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

Open question
Question 04 Budget Deficits And The Trade Balance

Which statement about the market for foreign currency exchange is correct?

Correct answer D. An increase in Pakistan's net capital outflow increases the supply of rupees and the rupee depreciates

Open question

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