Which of the following would NOT be a consequence of an increase in the Canadian government's budget deficit?
A) Canadian interest rates rise.
B) Canadian net capital outflow falls.
C) The real exchange rate of the Canadian dollar depreciates.
D) The Canadian supply of loanable funds shifts left.

Question

Quizplus · Accepted Answer

An increase in the government's budget deficit typically leads to higher interest rates and a reduction in net capital outflow due to the increased demand for loanable funds. However, it does not directly cause the real exchange rate of the Canadian dollar to depreciate; instead, it might appreciate due to higher interest rates attracting foreign capital.

Which of the Following Would NOT Be a Consequence of an Increase