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It May Be Misleading to Label a Trade Deficit as Unfavorable

Question 21

Multiple Choice

It may be misleading to label a trade deficit as unfavorable or adverse, because


A) the multiplier does not apply to a trade deficit.
B) a trade deficit increases a nation's aggregate output and employment.
C) a nation's consumers benefit from a trade deficit during the period it occurs.
D) a trade deficit precludes inflation.

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