European Union (EU) has created a 750-billion stimulus package to rebuild the recession-hit economies of its members.
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Question:
European Union (EU) has created a 750-billion stimulus package to rebuild the recession-hit economies of its members. Assume that this package will be fully implemented in 2021 and will not change government revenues or investment in the EU economy, but it is expected to raise private savings by 500 billion. If these expectations are correct, by how much EU's trade deficit will change in 2021 compared to a situation that would have prevailed in the absence of the stimulus package?
a.EU's trade deficit will decline by 750 billion.
b.EU's trade deficit will decline by 500 billion.
c.EU's trade deficit will not change.
d.EU's trade deficit will rise by 250 billion.
e.EU's trade deficit will rise by 500 billion.
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