In an open economy, a decrease in the government's budget deficit will ____ the domestic real interest rate and ____ the level of output, holding other factors constant.
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A decrease in the government's budget deficit means that the government is spending less than it is earning in revenue. This can be achieved through measures such as reducing government spending or increasing taxes. Show more…
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The government in an open economy cuts spending to reduce the budget deficit. As a result, the interest rate _______, leading to a capital _______ and a currency _______. a. falls; outflow; appreciation b. falls; outflow; depreciation c. falls; inflow; appreciation d. rises; inflow; appreciation
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Explain how decreased domestic investments that occur due to a budget deficit will affect future economic growth.
'In order to boost output, the federal government engages in taxes fiscal policy; which government spending and expansionary; lowers; raises contractionary; lowers; raises expansionary; raises; lowers contractionary; raises; lowers'
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