For the federal deficit to be lowered
A) the Federal Reserve must reduce the money supply.
B) the federal government must decrease its spending and increase net exports.
C) the federal government's expenditures must be lower than its tax revenue.
D) the Federal Reserve must raise interest rates and lower the required reserve ratio.
Question 2
What two measures of macroeconomic activity are often referred to as the twin deficits?
A) the budget deficit and the trade balance
B) net capital flows and net exports
C) the foreign exchange deficit and net foreign investment
D) the saving-investment deficit and the export deficit
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