This document provides definitions for economic terms and concepts including fiscal policy, trade balances, net capital outflows, aggregate expenditure and demand-supply models, liquidity preference, and liquidity traps. It asks the reader to match each concept to its corresponding definition.

1. Match Concepts to Definitions 1. Fiscal Policy 2. Trade surplus 3. Net capital outflow or NCO 4.
Trade deficit. 5. Balanced trade 6. Aggregate Expenditure Model. 7. Aggregate Demand-Supply
Model 8. Liquidity Preference 9. Liquidity Trap A. Positive level of net exports B. Net exports
are equal to zero. C. Net exports are negative D. Relationship between real Consumption plus
Investment plus Government plus Net Exports and price level. E. The purchase of foreign assets
by domestic residents minus the purchase of domestic assets by foreigners. F. When interest rates
are close to zero. G. Government spending and taxation policy. H. Interest rate adjusts to bring
money supply and money demand into equilibrium. I. Relationship between total desired or
planned expenditures on goods and services in the economy and real income assuming no change
in the price level.
Solution
fiscal policy government spending and taxation policy trade surplus positive level net exports net
capital outflow the purchase of foriegn assets by domestic residents minus the purchase of assets
by forigners trade deficiet net export are negative balanced trade net export are equal to zero
aggregate expenditure model relationship between real consumption plus investment plus
government export and price level aggregate demand and supply model relationship betweentotal
desired or planned expenditure on good economy and real income assuming no change in the
price level liquidity preference interest rate adjusts to bring money supply and money demand in
to liquidity trap when interest rates are close to zero