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- Subject
- Budget Deficits And The Trade Balanceeconomics-mcqs › budget-deficits-and-the-trade-balance
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
What is the effect of a rise in Pakistan's government budget deficit on its net exports and net capital outflow?
Multiple choice question for Budget Deficits And The Trade Balance. Select an option, then review the explanation below.
Explanation
When Pakistan’s government budget deficit increases, it typically leads to higher net exports as a result of reduced domestic savings, which in turn lowers the net capital outflow. Therefore, net exports rise while net capital outflow declines.
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