What actions could be taken to stabilize output in response to a large decrease in U.S.net exports?
A)increase taxes or increase the money supply
B)increase taxes or decrease the money supply
C)decrease taxes or increase the money supply
D)decrease taxes or decrease the money supply

Question

Quizplus · Accepted Answer

If there is a large decrease in U.S. net exports, it means that the economy is experiencing a drop in foreign demand for domestically produced goods and services. This can lead to a decrease in aggregate demand and output, potentially causing a recession. To counteract this, the government can decrease taxes or increase the money supply to stimulate spending and investment in the domestic economy. Decreasing taxes puts more money in consumers' pockets, which can increase consumption, while increasing the money supply lowers interest rates and makes it easier for businesses to borrow and invest. Both of these policies can help stabilize output during a period of decreased net exports.

What Actions Could Be Taken to Stabilize Output in Response