Which of the following lists contains only things that decrease when the budget deficit of the Canadian government increases?
A)Canadian net exports, national saving, and net capital outflow
B)Canadian supply of loanable funds, the real exchange rate of the dollar, and domestic investment
C)Canadian imports, interest rates, and the real exchange rate of the dollar
D)National saving, net exports, and the quantity demanded for loanable funds for domestic investment

Question

Quizplus · Accepted Answer

When the budget deficit increases, national saving decreases because the government is borrowing more, reducing the pool of savings available for investment. This can lead to a decrease in net exports and net capital outflow as domestic resources are used to finance the deficit.

Which of the Following Lists Contains Only Things That Decrease