Gross private domestic investment-government spending


Problem: Suppose a nation's savings, gross private domestic investment, government spending, and taxes remained unchanged from period 1 to period 2, but tariffs and quotas on imported goods and services rose by 20% from period 1 to period 2. The net effect on the balance on goods and services would be:

A. It would make the balance on goods and services more positive

B. It would make the balance on goods and services more negative

C. It would have no effect on the balance on goods and services

D. There is no way to tell what effect it would have on the balance on goods and services

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Finance Basics: Gross private domestic investment-government spending
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