If a country raises its budget deficit,then its
A)net capital outflow and net exports rise.
B)net capital outflow rises and net exports fall.
C)net capital outflow falls and net exports rise.
D)net capital outflow and net exports fall.

Question

Quizplus · Accepted Answer

When a country raises its budget deficit, it often leads to higher interest rates, attracting foreign capital, which reduces net capital outflow. This can cause the currency to appreciate, making exports more expensive and reducing net exports.

If a Country Raises Its Budget Deficit,then Its