Used alone,an expenditure-switching policy that turns spending from foreign goods to domestic goods
A)will not reduce the current account deficit.
B)is likely to cause a recession.
C)will be likely to increase the current account deficit.
D)is likely to increase domestic inflation.

Question

Quizplus · Accepted Answer

An expenditure-switching policy, such as tariffs or devaluation, makes foreign goods more expensive and domestic goods cheaper, which can lead to increased demand for domestic goods and potentially cause inflation if the domestic economy is near full capacity.

Used Alone,an Expenditure-Switching Policy That Turns Spending from Foreign Goods