LG 1. Knowledge Comprehension

LO 1.1. Generate knowledge of core concept and theory If a country’s fiscal deficit widens sharply, how might international investors respond?

Question

LG 1. Knowledge Comprehension

LO 1.1. Generate knowledge of core concept and theory If a country’s fiscal deficit widens sharply, how might international investors respond?

Answer

Increase investment as government spending boosts demand.

Answer

Reduce exposure due to concerns about debt sustainability and currency depreciation.

Answer

Maintain investment because fiscal deficits are neutral in the long run

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