A government decides to introduce an expenditure switching measures to reduce a balance of trade deficit. Which of the following is an expenditure switching measure? Select one: a. an increase in income tax b. a government subsidy to domestic producers O C. a decrease in state benefits O d. an increase in the rate of interest

A government decides to introduce an expenditure switching measures to reduce a balance of trade deficit. Which of the following is an expenditure switching measure? Select one: a. an increase in income tax b. a government subsidy to domestic producers O C. a decrease in state benefits O d. an increase in the rate of interest

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 17SCQ: For each of the following, indicate which type of government spending would justify a budget deficit...

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India ranked 8th in size 0f trade deficit The tenure 0f the previ0us g0vernment, fr0m 2013 t0 2018, witnessed a skyr0cketing current acc0unt deficit as it increased fr0m $2.5 billi0n in FY13 t0 $18.9 billi0n in FY18. The maj0r driver was the trade deficit, which widened fr0m $19.2 billi0n in 2012 t0 $35.6 billi0n in 2017, acc0rding t0 data extracted fr0m the ITC’s Trademap.0rg. Imp0rts increased fr0m $43.8 billi0n in 2012 t0 $57.4 billi0n in 2017 and exp0rts decreased fr0m $24.6 billi0n in 2012 t0 $21.9 billi0n in 2017. Between July 2014 and June 2015, REER had increased by 8.83%. It increased by 5.54% in the pri0r fiscal year, FY14. In simpler terms, the rupee was kept ab0ve its equilibrium value between June 2013 and June 2018, making it cheaper t0 purchase g00ds fr0m 0ther c0untries. Furtherm0re, exp0rters l0st their c0mpetitiveness against f0reign c0mpetit0rs in the gl0bal market. T0day, with the rupee cl0ser t0 its equilibrium value, exp0rts have increased. This has p0sitively…