Suppose policy makers want to increase NX and keep Y constant.Which of the following policies would most likely achieve this?

Question

Quizplus · Accepted Answer

A reduction in government spending can decrease domestic demand, which can help keep output (Y) constant while a reduction in the real exchange rate (real depreciation) can make exports cheaper and imports more expensive, thus increasing net exports (NX).

Suppose Policy Makers Want to Increase NX and Keep Y