Which of the following groups would be most harmed by a UK government budget deficit ?
Correct answer: B. BAe Systems wishing to sell aircraft to Saudi Arabia
- A. Foreigners who wish to buy assets in the UK
- B. BAe Systems wishing to sell aircraft to Saudi Arabia
- C. UK residents wishing to buy foreign Produced cars
- D. Lenders of loanable funds
Explanation
A UK budget deficit tends to appreciate the pound by raising interest rates and attracting capital, making UK exports more expensive abroad. Therefore, BAe Systems would be harmed when selling aircraft to Saudi Arabia, while importers may benefit.
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