How could a greater budget deficit increase the trade deficit?What happens to the multiplier if there is an increase in the marginal propensity to consume?What would likely happen to the level of economic activity if the government took the necessary steps to reduce the deficit significantly in a relatively short period of time?When is the most appropriate time to reduce the deficit?

Answered: How could a greater budget deficit…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

How could a greater budget deficit increase the trade deficit?
What happens to the multiplier if there is an increase in the marginal propensity to consume?
What would likely happen to the level of economic activity if the government took the necessary steps to reduce the deficit significantly in a relatively short period of time?
When is the most appropriate time to reduce the deficit?

Expert Solution

Introduction:

A budget in the economy is used to represent the financial health of the country. A budget is the financial statement of the country total income and expenditure during a given period of time.

A budget deficit means the expenditure in the economy are greater than the income generated in the economy.

Trade represents the import and export activities undertaken by the economy during a given period of time.

Trade deficit refers to the situation where the imports of the country is greater than the export of the country.

Step by step

Solved in 2 steps

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions