A reduction in the budget deficit can be reflected in

Question

Quizplus · Accepted Answer

A reduction in the budget deficit can lead to a reduction in private saving if the government borrows less, leaving more funds available for private investment (crowding-in effect). It can also lead to an increase in investment due to the same crowding-in effect. Additionally, it can lead to an increase in net exports because a smaller deficit can lead to lower interest rates, which can reduce the value of the currency, making exports cheaper and imports more expensive.

A Reduction in the Budget Deficit Can Be Reflected in