15) Are federal budget deficits related to trade deficits? 15) A) No. The budget

Question

15) Are federal budget deficits related to trade deficits? 15) A) No. The budget deficit is entirely a domestic matter while the trade deficit only affects US citizens who travel abroad. B) Yes. As deficit spending goes up, it is likely government borrowing will, too. Then foreign residents who lend funds to the U.S. government have less to spend on our goods,so U.S exports will fall. C) Yes, but only if the quality of U.S. goods and services is deteriorating. D) Yes. If US. consumers buy too many imported goods they don't have money to save and a budget deficit results 16) Politicians have suggested that the budget deficit could be reduced by 16) A) forbidding interest payments on government bonds outsourcing B) increasing taxes and reducing expenditures. C) imposing higher tariffs on imported goods. D) lowering the interest rates.

Explanation / Answer

Ans)

15.

B. Yes. As deficit spending goes up, it is likely government borrowing will, too. Then foreign residents who lend funds to the U.S. government have less to spend on our goods, so U.S. exports will fall.

16.

B.increasing taxes and reducing expenditures.

A deficit occurs when the government spending is greater than the revenues collected.Taxes are the source of government revenue.Thus, the politician's suggestion that increasing taxes and lowering spending might reduce the deficit.

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