An increase in the budget surplus raises act exports and raises act exports and

Question

An increase in the budget surplus raises act exports and raises act exports and reference the initial effect of an increase in the budget deficit in the loanable funds market is illustrated as a move from a to b a to c c to b c to d In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy microeconomic model this policy should have reduced imports into the United States and made U.S. net exports rise. reduced imports into the United States and made the net supply of dollars in the foreign exchange market shift right reduced imports of steel into the United States, but reduced U.S. exports of other goods by an equal amount.

Explanation / Answer

48. C. C to B

As budget deficit increases , government borrows from market , and thus supply of loans to private sector decreases which causes left/upward shift of supply of loanable assets and equilibrium shifts from C to B

49. 4th option not visible , but most probably that is the correct option also.

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