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A Change in Fiscal Policy Will Affect the Current Account

Question 4

Multiple Choice

A change in fiscal policy will affect the current account so long as


A) neither private savings nor investment responds to the change in fiscal policy.
B) both private savings and investment responds to the change in fiscal policy.
C) private savings does respond but investment does not respond to the change in fiscal policy.
D) private savings does not respond but investment does respond to the change in fiscal policy.
E) there is an investment boom caused by high interest rates.

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