A decrease in the budget deficit can be reflected in:

Question

Quizplus · Accepted Answer

A decrease in the budget deficit can lead to a decrease in investment (A) as the government may have to decrease spending on public investment projects. It can also lead to an increase in net exports (C) as there may be a decrease in aggregate demand, causing a decrease in imports and an increase in exports. However, there is no direct link between a decrease in the budget deficit and a decrease in saving (B). Thus, option D is incorrect. Therefore, the correct answer is E.

A Decrease in the Budget Deficit Can Be Reflected In