If the british government raised its budget deficit, then the pound (british\'s

Question

If the british government raised its budget deficit, then the pound (british's currency) would depreciate and british net exports would rise depreciate and british net exports would fall appreciate and british net exports would rise appreciate and british net exports would fall if the U. S. government increased its deficit then U. S. bonds would pay higher interest but a dollar would purchase fewer foreign goods. U. S. bonds would pay higher interest but a dollar would purchase more foreign goods. U. S. bonds would pay lower interest but a dollar would purchase fewer foreign goods. U. S. bonds would pay lower interest but a dollar would purchase more foreign goods. An increase in the budget surplus raises net exports and domestic investment raises net exports and reduces domestic investment reduces net exports and raises domestic investment reduces net export and domestic investment.

Explanation / Answer

Answer 45:

Deficit in the budget lead to depriciation of the currency in case of floating exchange rate and will thus, will increae exports and reduce imports, thus increasing the net exports.Thus, option a.

Answer 46:

Return on bonds will fall and also purchase of fewer foreign goods.Option c.

Answer 47:

It lead to appreciation of the currency and thus, decline in the net exports. It will reduce government borrowing form the market and thus no crowding out of private investment. Thus, domestic investment rises.

Option c

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