The table below includes information on the hypothetical economy of Hersty. Assume the government is running a deficit. Enter the missing values in the table and answer the question below the table. Note that all values are in millions of Herstian dollars. Budget Deficit Investment 75 Spending Private Savings 2010 125 Trade Deficit 150 2011 110 400 110 2012 650 105 365 The country of Hersty has a budget deficit and trade deficit, a situation referred to as the twin deficits. Which of the following is the most accurate statement about the twin deficits? They are identical twins, always the same size. It is common to see trade and budget deficits increase at the same time. Budget deficits lead to lower interest rates, which encourage foreigners to buy U.S. bonds rather than U.S. goods and services. The twin deficits result in an outflow of foreign financial investment.
The table below includes information on the hypothetical economy of Hersty. Assume the government is running a deficit. Enter the missing values in the table and answer the question below the table. Note that all values are in millions of Herstian dollars. Budget Deficit Investment 75 Spending Private Savings 2010 125 Trade Deficit 150 2011 110 400 110 2012 650 105 365 The country of Hersty has a budget deficit and trade deficit, a situation referred to as the twin deficits. Which of the following is the most accurate statement about the twin deficits? They are identical twins, always the same size. It is common to see trade and budget deficits increase at the same time. Budget deficits lead to lower interest rates, which encourage foreigners to buy U.S. bonds rather than U.S. goods and services. The twin deficits result in an outflow of foreign financial investment.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter17: Taxation And Resource Allocation
Section: Chapter Questions
Problem 2DQ
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