What is the effect of a rise in Pakistan's government budget deficit on its net exports and net capital outflow?

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Raises Pakistan’s net exports while lowering its net capital outflowReduces both Pakistan’s net exports and net capital outflow by an equal amountBoosts Pakistan’s net exports and net capital outflow equallyLowers Pakistan’s net exports but increases its net capital outflow

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.