What might the government do to offset the effect of a steep fall in net exports on the economy?

Question

Quizplus · Accepted Answer

By increasing government purchases, the government can create a demand for goods and services that can offset the decrease in net exports. This is known as fiscal stimulus, and it can help boost economic growth and reduce the impact of a fall in net exports. Increasing taxes or decreasing transfer payments would have the opposite effect, as it would decrease disposable income and aggregate demand, which would further worsen the impact of the fall in net exports. Similarly, decreasing government purchases would also worsen the situation, as it would reduce aggregate demand and exacerbate the negative impact on the economy.

What Might the Government Do to Offset the Effect of a Steep