Which set of events would best explain the effects of contractionary fiscal policy on net exports?

1) It decreases domestic interest rates, causing the dollar to appreciate and net exports to decrease

2) It decreases domestic interest rates, causing the dollar to depreciate and net exports to increase

3) It decreases domestic interest rates, causing the dollar to depreciate and net exports to decrease

If the slope of a line representing taxes was not as steep, there would be

1) less built-in stability for the economy

2) no change in the built-in stability for the economy