Provide answer with explanation A result of budget deficits is that governments have to borrow more, sometimes resulting in:a. Top of Form increasing interest costs. b. decreasing interest costs. C, increased foreignborrowing. d, crowding out the private sector for capital. All other things remaining the same,which one of the following events would directly increase the size of the UK's national debt?An increase inA. mortgage borrowing from UK banks.B. overseas lending to UK firms.C. the UK's current account deficit.D. the UK government's budget deficit.

1.Result of Budget Deficits:a. Increasing interest costs: When a government runs budget deficits, it…

Answered: A result of budget deficits is that…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter6: Government Influence On Exchange Rates

Section: Chapter Questions

Problem 13QA

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If a central bank decreases interest rates, then gradually: a. the country's gross domestic product is likely to decrease. b. foreign exchange rate is likely to appreciate. c. demand for exported goods and services is likely to increase. d. flows of investment funds into the country are likely to decrease.
Those who say the growing current account deficit in the United States is not a significant problem make the argument that: 1.the current account deficit may hurt exporters, but American consumers gain as a result of lower relative prices. 2.the current account deficit is offset by an equally large capital account deficit, which ultimately leads to appreciation of the U.S. dollar. 3.the large current account deficit will ultimately lead to a current account surplus. 4.the increased investment in the United States as a result of the current account deficit will ultimately lead to increases in wealth and economic growth in the United States.
There has been concerns among businesses that the recent reductions in the NIPR has not led to significant decreases in bank lending rates. What do you think could be accounting for this? What additional measures can policy-makers undertake to reduce the Cost of borrowing in the country?
The size of a country’s national debt should not be of much economic concern as long as:a. the debt does not lead to rising inflation.b. the debt is funded from international sourcesc. the general population hoards treasury billsd. it increases at a slower rate than GDP does
1. In order to reduce its current-account deficit, the United States would NOT do which of the following? a . raise national product relative to national spending b. decrease savings relative to domestic investment c . increase savings relative to domestic investment d . reduce the federal budget deficit
A current account deficit implies that* more goods and services are exported than are imported. the country borrowed from abroad more than it loaned and/or sold off some of its assets. the country is going bankrupt. the value of the dollar will rise. there is excessive consumption of foreign financial assets.
6. If the U.S. runs a current account deficit next year, which of the following are necessarily true: A) U.S. will have to run a government budget deficit B) The Central Bank of China will have to buy U.S. treasury bonds C) The U.S. will import more goods and services than it exports D) U.S. national saving will be less than U.S. national investment
Which one of the factors is most likely to be associated with an increase in the US trade deficit: higher savings rate in the US O higher investment opportunity in the US O low spending rate, relative to income levels in the US O depreciation of the US dollar
A country running a large current account deficit tends to have Question 18 options: a booming export oriented economy an excessively strong currency a large surplus in its financial account a large budget surplus
Suppose the Australian government has announced tax cuts for the business sector. Using the loanable funds model, explain how this will impact the supply of and demand for loanable funds and the interest rate in Australia.
Which of the following is NOT usually associated with “financial risk”? a. A rise in the country’s interest rates. b. A new government has been voted in. c. Fluctuation in a country’s currency. d. Difficulty in accessing funds from banks.

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