Multiple Choice
In the 1980s, the U.S. government budget deficit rose. At the same time the U.S. trade deficit grew larger, the real exchange rate of the dollar appreciated, and U.S. net capital outflow decreased. Which of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit?
A) The U.S. trade deficit grew.
B) The real exchange rate of the dollar appreciated.
C) U.S. net capital outflow fell.
D) None of the above is contrary to the predictions of the model.
Correct Answer:
Verified
Correct Answer:
Verified
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