Multiple Choice
If a government increases its budget deficit, which of the following best predicts the effects?
A) The real exchange rate appreciates, and the trade balance moves toward surplus.
B) The real exchange rate appreciates, and the trade balance moves toward deficit.
C) The real exchange rate depreciates, and the trade balance moves toward surplus.
D) The real exchange rate depreciates, and the trade balance moves toward deficit.
Correct Answer:
Verified
Correct Answer:
Verified
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