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Which of the following would be classified as expenditure reducing strategy?
1) providing subsidies to exporters
2) lowering the currency exchange rate (devaluation)
3) running a budget surplus
4) import tariffs and quotasAnswer is 3 can you please explain this I thought . 2) would be the answer lower exchange rate would increase export and decrease import
Running a budget surplus also mean increase of export then import. I am confused in this questionImport/export does not affect government expenditure. Currency exchange rates might move, but not government expenditure.
Running a budget surplus means the government earns more than it spends. One way to do that is to reduce government expenditure.
But budget surplus will increase government spending / expenditure how will it reduce expenditure?? As government is earning more
Surplus can be achieved by REDUCING government spending.
A surplus is when government income exceeds expenditure.
A deficit is when expenditure exceeds income.
A surplus can be created/increased by either increasing government income or decreasing government expenditure (or both together).
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