Since the mid-1990s,Canadian governments have tried to eliminate budget deficits.Which of the following was expected to happen?
A)This would decrease national saving, appreciate the real exchange rate, and decrease net exports.
B)This would increase national saving, appreciate the real exchange rate, and increase net exports.
C)This would increase national saving, depreciate the real exchange rate, and increase net exports.
D)This would decrease national saving, depreciate the real exchange rate, and decrease net exports.

Question

Quizplus · Accepted Answer

Reducing budget deficits typically increases national saving, which can lead to a depreciation of the real exchange rate, making exports cheaper and increasing net exports.

Since the Mid-1990s,Canadian Governments Have Tried to Eliminate Budget Deficits