If the economy is operating below the full-employment level of output, what would be the effect on the trade balance of an increase in the government’s budget deficit?

An increase in the budget deficit causes a decrease in the trade deficit.
An increase in the budget deficit causes an increase in the trade deficit.
An increase in the budget deficit causes an increase in the trade surplus.
There is no relationship between the budget deficit and the trade deficit.

Question

If the economy is operating below the full-employment level of output, what would be the effect on the trade balance of an increase in the government’s budget deficit?
 	
	An increase in the budget deficit causes a decrease in the trade deficit.
	An increase in the budget deficit causes an increase in the trade deficit.
	An increase in the budget deficit causes an increase in the trade surplus.
	There is no relationship between the budget deficit and the trade deficit.

anonymous · Answer

I don't think there should be any relationship between two deficits; trade and budget. So number 4

anonymous · Answer

are you getting them correct?

anonymous · Answer

i have not graded the worksheet yet

anonymous · Answer

i will when they all are done

anonymous · Answer

nervous

anonymous · Answer

ha....i hope u are doing good..:)