Assume That Policy Makers Pass a Budget That Calls for an Increase

Multiple Choice

Assume that policy makers pass a budget that calls for an increase in government spending. In an open economy, which of the following will occur as a result of this fiscal policy action?

A) Private saving increases.
B) Investment decreases.
C) The current account worsens.
D) Either A or C occurs.
E) Either A, B, or C occurs.