As a result of an increase in government spending,some of the crowding out of private expenditures may come in the form of
A) an increase in consumption.
B) an increase in net exports.
C) a decrease in taxes.
D) a decrease in net exports.

Question

Quizplus · Accepted Answer

An increase in government spending can lead to higher interest rates, which may reduce net exports by making exports more expensive and imports less expensive. This is a form of crowding out, where government spending replaces private, foreign spending. Therefore, choice D is the best answer.

As a Result of an Increase in Government Spending,some of the Crowding