Holding everything else constant, which of the following would cause economic activity to decrease?
A) The value of exports is less than the value of imports.
B) Business and household saving is less than investment spending.
C) Taxes are less than government purchases and transfer payments.
D) Household saving is less than household spending from borrowing.

Question

Quizplus · Accepted Answer

When the value of exports is less than the value of imports, it means that a country is buying more from abroad than it is selling. This can lead to a trade deficit, which might reduce domestic economic activity because money is flowing out of the country to pay for these imports rather than being spent on domestically produced goods and services.

Holding Everything Else Constant, Which of the Following Would Cause