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Subject - Economics:

Macroeconomics

MCQ - 83-4093

Question:

A nation that must consistently borrow to cover annual budget deficits risks

  1. a depreciation of the nation’s currency as foreigners increase investment in the nation.
  2. a decline in net exports as the nation’s goods become more expensive to foreign consumers.
  3. lower interest rates that discourage foreign investment in the nation.
  4. a decline in net exports as the nation’s goods become more expensive to foreign consumers.
  5. lower interest rates that reduce private investment in productive capital.

Correct Answer: B

Explanation:

Extensive borrowing increases the interest rate on U.S. securities. Foreign investors seek to buy dollars so that they can invest in these securities, but when the dollar appreciates, American exports become more expensive to foreign consumers, and so net exports fall.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: A nation that must consistently borrow to cover annual budget deficits risks , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 83-4093.

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