Author Question: For this question, assume that equilibrium output is determined in the ZZ-Y diagram. Further assume ... (Read 51 times)

karateprodigy

  • Hero Member
  • *****
  • Posts: 550
For this question, assume that equilibrium output is determined in the ZZ-Y diagram. Further assume that policy makers' goals are (1 ) to achieve balanced trade (i.e., NX = 0); and (2 ) to achieve a target level of output, say YT. Now, suppose that the initial level of equilibrium output is equal to YT (i.e., Y = YT) and that a trade deficit exists at this initial level of output. Which of the following policy actions would most likely enable the policy makers to achieve their two goals simultaneously?
 
  A) a reduction in government spending
  B) convince the country's trading partners to pursue policies that will cause an increase in foreign income (Y)
  C) a reduction in the real exchange rate
  D) a reduction in taxes
  E) a simultaneous increase in government spending and reduction in the real exchange rate
  F) none of the above

Question 2

As fiscal consolidation takes place, the central bank should
 
  A) decrease the policy rate.
  B) increase the policy rate.
  C) increase inflation rate.
  D) decrease money supply.



ebenov

  • Sr. Member
  • ****
  • Posts: 331
Answer to Question 1

B

Answer to Question 2

A



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

The people with the highest levels of LDL are Mexican American males and non-Hispanic black females.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

There are 20 feet of blood vessels in each square inch of human skin.

For a complete list of videos, visit our video library