Question
I am having an issue deciding which is the correct response to the question below. The government of Peru wants to adopt policies that increase
I am having an issue deciding which is the correct response to the question below.
The government of Peru wants to adopt policies that increase investment in the country this year. It does not want to reduce its budget deficit and is unable to change private savings. If it proceeds with its pro-investment policies, it should expect the country's trade deficit to
a. increase.
b. decrease.
c. remain unchanged.
d. decrease if the amount of increase in investment is large and increase otherwise.
Choice a looks like the correct answer, but choice d is throwing me off. Which is the best response and why? Thanks.
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