If government spending is increased without a raise in taxes,net exports will eventually decrease due to a rise in interest rates.This phenomenon is known as the

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When government spending increases without a corresponding increase in taxes, it creates a budget deficit. In order to finance the deficit, the government may choose to borrow from the domestic market. This increases the demand for loanable funds and, as a result, interest rates rise. This makes domestic assets more attractive to foreign investors, leading to an increase in the value of the domestic currency. As a result, exports become more expensive and thus net exports will eventually decrease. This phenomenon is known as the net export effect.

If Government Spending Is Increased Without a Raise in Taxes,net