A reduction in G or an increase in T would lead to lower real interest rates in the United States, a depreciating dollar, and, eventually, a smaller trade deficit..

Question

Quizplus · Accepted Answer

A reduction in G (government spending) or an increase in T (taxes) would lower aggregate demand and lead to lower real interest rates in the United States. This would also lead to a depreciating dollar and eventually a smaller trade deficit due to the lower demand for imports.

A Reduction in G or an Increase in T Would