To offset the effect of a steep rise in net exports on the economy, the government might:
A)increase government purchases.
B)decrease government purchases.
C)increase taxes.
D)both (b) and (c) above

Question

To offset the effect of a steep rise in net exports on the economy, the government might:
A)​increase government purchases.
B)​decrease government purchases.
C)​increase taxes.
D)​both (b) and (c) above

Quizplus · Accepted Answer

To offset the effect of a steep rise in net exports, which would increase aggregate demand, the government might decrease government purchases and/or increase taxes to reduce the aggregate demand, thus stabilizing the economy.

To Offset the Effect of a Steep Rise in Net