The private sector balance and the government sector balance tend to move in ________. Net exports respond ________.

Question

Quizplus · Accepted Answer

The private sector balance and government sector balance tend to move in opposite directions as a change in private saving changes the private sector balance, while a change in government saving changes the government sector balance. Net exports respond to the sum of the government sector and private sector balances because any changes in these balances can cause shifts in aggregate demand, which in turn affects net exports. Therefore, option D is correct.

The Private Sector Balance and the Government Sector Balance Tend