Considering its direct effect on income, which of the following policies is most likely to reduce a country's trade deficit?
A)An increase in the money supply
B)A cut in taxes
C)An increase in government spending
D)An increase in taxes

Question

Quizplus · Accepted Answer

An increase in taxes can reduce a country's trade deficit by decreasing consumers' disposable income, which in turn can lead to a reduction in the import of goods and services. This decrease in imports can help in reducing the trade deficit.

Considering Its Direct Effect on Income, Which of the Following