Question 30 This question is based on the following diagram that
Answer saved illustrates the effect of an increase in foreign demand.
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Which one of the following statements is INCORRECT?
Select one:
A. At the equilibrium level of output Y1, the demand
for domestic goods is given by the distance DC;
the domestic demand for goods is given by
distance DA1; therefore, net exports are given by
distance CA1.
B. Higher foreign output (Y*↑) means higher foreign
demand. This leads to higher exports of domestic
goods (South African goods), increasing output
and the domestic demand for goods through the
multiplier.
C. While imports increase, the increase does not
offset the increase in exports, and the trade
balance improves.
D. The difference between curve ZZ and curve DD
equals net exports.
Clear my choice
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Assessment 1
, This question is based on the following information.
Given the goods market equilibrium in the diagram below, what
happens to the output level and the trade balance if government
spending increases?
Which one of the following statements is correct?
Select one:
A. The level of output decreases, and the trade deficit
decreases as imports decrease.
B. The level of output decreases, and the trade deficit
decreases as exports decrease.
C. The level of output increases, and the trade deficit
increases as exports increase.
D. The level of output increases, and the trade deficit
increases as imports increase.
Clear my choice
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Assessment 1
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