According to the traditional view of government debt, if taxes are cut without a cut in government spending, then in Canada this situation will lead to _____ net indebtedness on the part of Canada to foreign countries and _____ net exports.

Question

Quizplus · Accepted Answer

Cutting taxes without reducing government spending increases the budget deficit, leading to more borrowing from foreign countries, thus increasing net indebtedness. This can result in a stronger currency, making exports more expensive and reducing net exports.

According to the Traditional View of Government Debt, If Taxes