A small open economy would typically enjoy a higher trade balance if,in the domestic economy,________.
A)autonomous consumption expenditures increase
B)taxes decrease
C)government spending decreases
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

A decrease in government spending would typically result in a decrease in imports, thus increasing the trade balance of a small open economy. Autonomous consumption expenditures and taxes do not necessarily have a direct impact on the trade balance.

A Small Open Economy Would Typically Enjoy a Higher Trade