Suppose policy makers want to reduce NX and keep Y constant. Which of the following policies would most likely achieve this?

Name: Suppose policy makers want to reduce NX and keep Y constant. Which of the following policies would most likely achieve this?
Brand: Quizplus
Rating: 4.8 (54 reviews)

Question

Quizplus · Accepted Answer

A real exchange rate appreciation makes domestic goods more expensive for foreigners, reducing exports and thus NX. A tax cut increases disposable income, boosting consumption and investment, which can offset the reduction in NX to keep Y constant.

Suppose Policy Makers Want to Reduce NX and Keep Y