Which of the following is the most likely result from an increase in a country's government budget surplus?
A)higher interest rates
B)lower imports
C)lower net capital outflows
D)lower domestic investment

Question

Quizplus · Accepted Answer

If a country's government budget surplus increases, it means that the government is collecting more revenue than it is spending. This often leads to a reduction in government borrowing, which can reduce the demand for loans and lower interest rates. However, an increase in government budget surplus can also lead to lower imports, as the government may decide to reduce spending on imports in order to keep the surplus. This reduction in imports can lead to a decrease in net capital outflows, as the country has fewer imports to pay for. However, there is no direct relationship between government budget surplus and domestic investment.

Which of the Following Is the Most Likely Result from an Increase