According to the traditional view, if taxes are cut without cutting government spending, then the international effect initially will be a capital and a trade .
A)inflow; deficit
B)inflow; surplus
C)outflow; deficit
D)outflow; surplus

Question

Quizplus · Accepted Answer

Cutting taxes without reducing government spending typically leads to increased government borrowing, attracting foreign capital (capital inflow) to finance the deficit, and resulting in a trade deficit as domestic consumption increases.

According to the Traditional View, If Taxes Are Cut Without