Question and answer
In considering the net effect of expansionary fiscal policy on the trade deficit, the A. income effect offsets the price effect B. price effect offsets the income effect C. income and price
effects work in the same direction, so the trade deficit is decreased D. income and price effects work in the same direction, so the trade deficit is increased
The answer is C. Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions.
Expert answered|ged102028|Points 8|
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Asked 277 days ago|12/17/2013 3:19:12 AM
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