Which of the following leads to an increase in net exports in the long run?
A)either a decrease in the budget deficit or imposing an import quota
B)a decrease in the budget deficit but not imposing an import quota
C)imposing an import quota but not a decrease in the budget deficit
D)neither a decrease in the budget deficit nor imposing an import quota

Question

Quizplus · Accepted Answer

A decrease in the budget deficit can lead to an increase in net exports in the long run by reducing the government's demand for domestic goods and freeing up resources for export-oriented industries. Imposing an import quota may lead to a short-term increase in net exports, but in the long run, it can result in retaliatory measures by trading partners and reduce the competitiveness of domestic firms. Therefore, the best choice is a decrease in the budget deficit but not imposing an import quota.

Which of the Following Leads to an Increase in Net