Which of the following policies would you expect to crowd out exports?
A) A reduction in the money supply
B) An increase in the money supply
C) An increase in federal income taxes
D) An increase in government spending
E) None of the above

Question

Quizplus · Accepted Answer

An increase in government spending can lead to crowding out of exports by causing an appreciation of the domestic currency. This makes domestic goods more expensive for foreign buyers, potentially reducing exports.

Which of the Following Policies Would You Expect to Crowd