The international impacts of a debt-financed tax cut, according to the traditional view, are a(n) in net exports and a domestic currency .

Question

Quizplus · Accepted Answer

A debt-financed tax cut typically leads to increased domestic consumption and investment, which can increase the demand for imports, thus decreasing net exports. Additionally, higher interest rates to finance the debt can attract foreign capital, leading to an appreciation of the domestic currency.

The International Impacts of a Debt-Financed Tax Cut, According to the Traditional