A country has a government sector deficit and a private sector surplus.If the government sector deficit increases,and the private sector surplus decreases,________.

Question

Quizplus · Accepted Answer

An increase in government sector deficit leads to a decrease in private sector surplus, which means that private sector savings decrease. As a result, private consumption and investment decrease, which causes a decrease in demand for goods and services. This decrease in demand would lead to a decrease in net exports, as the country is less able to afford imports. Therefore, the correct choice is D, net exports decrease.

A Country Has a Government Sector Deficit and a Private